London — Gold steadied just below $1,300 an ounce on Friday ahead of US employment data, as investors watch for clues on the outlook for US interest rate policy.
The US nonfarm payrolls report for May is expected to show an additional 188,000 jobs last month, keeping the US Federal Reserve on track to raise interest rates this month.
Gold is highly sensitive to rising rates, which increase the opportunity cost of holding nonyielding bullion, while boosting the dollar, in which it is priced.
Spot gold traded at $1,298.62 an ounce by 9.30am GMT, little changed from late on Thursday, while US gold futures for August delivery were down 0.1% at $1,303.40 an ounce. Spot gold is down 0.1% so far this week.
“Investors will be closely watching the upcoming US [jobs] data,” ThinkMarkets chief market analyst Naeem Aslam said. “Any strength in the average hourly earning would make the dollar stronger. Robust US [job] numbers would push the gold price lower … the support of $1,280 would be the target point.”
Gold took little direction from currency markets on Friday, as a coalition deal put an apparent end to a political crisis in Italy, allowing the euro to stabilise against the dollar.
World stocks also rose and bond yields fell as investors welcomed the Italian deal, although appetite for risk remained fragile as concerns simmered over the prospect of a global trade war. A stand-off between the US and its trading partners re-ignited on Thursday after the US went ahead with tariffs on aluminium and steel imports from Canada, Mexico and the EU, ending the two-month exemption.
While a worsening global trade situation could benefit gold if it curbs appetite for assets seen as higher risk, the metal is still suffering from expectations that the US Fed will press ahead with rate hikes this year.
“Bullion is likely to trade reactive to headlines and dollar flows,” MKS said in a note. “[It needs] to consolidate above $1,300 to instill confidence in the market for a test through the 200-day moving average at $1,308.”
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, fell 0.52% to 847.03 tonnes on Thursday.
Among other precious metals, spot silver was up 0.7% at $16.46 an ounce, while platinum gained 1.1% to $911.10 an ounce, and palladium rose 0.2% to $987.06 an ounce.
Platinum saw the strongest gains among the major precious metals this week, rising 1.6%.