Gold takes heart as equities lose ground

Bengaluru — Gold prices rose on Friday, as US treasury yields fell and a pullback in global equities bolstered demand for the safe-haven metal ahead of the US non-farm payrolls report.

Spot gold was up 0.3% at $1,935.84/oz by 3.04am GMT, after falling to a near one-week low on Thursday. Bullion prices have declined 1.5% so far this week. US gold futures rose 0.2% to $1,941.80/oz.

“It’s a bit of flight to safety right now we are seeing in gold because the stock markets are lower,” said Edward Meir, an analyst at ED&F Man Capital Markets. “What also could be helping gold is the sharp slide we are seeing in US yields.”

Asia’s stock markets slipped, after the steepest Wall Street sell-off since June.

Treasury yields were on track for their biggest weekly decline in nearly three months. Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.

All eyes are now on US non-payroll figures due out at 12.30pm GMT for the latest indication of how the coronavirus-hit economy is faring. The data is expected to show payrolls grew by 1.4-million in August, compared with the 1.763-million jobs created in the previous month.

Gold is expected to be rangebound between $1,930/oz and $1,950/oz ahead of the non-farm payrolls report, said Stephen Innes, chief market strategist at financial services firm AxiCorp. “The reason for gold not sort of firing higher right now is because the dollar is picking up steam,” he added.

Meanwhile, Chicago Fed president Charles Evans called on Congress to deliver more fiscal aid and signalled the US monetary policy would be eased further and interest rates kept at ultra-low levels for years to help the economy recover its pre-pandemic strength.

Elsewhere, silver gained 0.2% to $26.67/oz and palladium climbed 1.2% to $2,313.04/oz. Platinum rose 0.3% to $891.50 but was on track for its worst week since mid-March, down more than 4%. 

Reuters