Gold slips after US data puts investors in a risk-on mood

Bengaluru — Gold prices remained under pressure on Friday, following a 2% drop in the previous session, as robust US data encouraged a return to riskier assets and hit demand for safe-haven bullion.

Spot gold was down 0.3% at $1,514.90/oz as of 4.19am GMT. Prices fell to $1,509.03/oz on Thursday, their lowest since August 23, following upbeat private payrolls and services industry data from the US.

The declines put gold on pace for its second straight week of losses. US gold futures slid 0.1% to $1,524/oz.

“Thursday’s data was positive, causing gold prices to reduce. We now expect a lot of volatility in the gold markets,” said Brian Lan, MD at dealer GoldSilver Central in Singapore.

Traders now await the monthly US payrolls report due at 12.30pm GMT for the next snapshot on the labour market’s health.

Risk appetite was also whetted by news that the US and China had agreed to hold high-level talks early in October that fuelled optimism for substantial progress in de-escalating the long, bitter trade conflict between the two.

Gold has jumped about 18% in 2019 as the bruising trade war has sparked fears of a global economic slowdown and encouraged interest rate cuts by major central banks around the world.

“Gold is still seen as a safe haven asset. A correction is bound to happen,” Lan said.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2%, putting it on track for a 2% weekly gain, which would make it the best week since mid-June.

Spot gold may test support at $1,496/oz, a break below which could cause a further fall to $1,453/oz, according to Reuters technical analyst Wang Tao.

Other precious metals dipped along with gold, with silver down 0.7% at $18.50/oz, after slumping 4.8% in the previous session to $18.48.

The metal, which on Wednesday hit its highest since September 2016, remained on track to end the week higher

Palladium fell 0.8% to $1,546.85/oz, dropping after three straight days of gains, while platinum declined 1.6% to $943.02. 

Reuters