Softer dollar helps gold reach a one-week high

Spot gold gained about 0.4% to $1,295.81 per ounce in early-morning trading, having hit a session high of $1,296.69 earlier. US gold futures were also up 0.4% at $1,300.10 an ounce.

“The dollar index is pulling back from multiweek highs,” said Margaret Yang, a market analyst with CMC Markets, Singapore, adding that a softer dollar is acting as a tailwind for gold.

“Though the non-farm payrolls data was better than expected, the manufacturing jobs fell which is a bad signal for the sector and doesn’t show a bright picture for the economic outlook.”

The dollar was down 0.1% against key rivals, making bullion cheaper for holders of other currencies.

Though employment growth accelerated from a 17-month low in March, data on Friday showed slowdown in wage growth and job cuts in the manufacturing sector, the first decline in factory payrolls since July 2017.

The moderation in wage growth supported the Fed’s decision to suspend further interest rate increases in 2019.

Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.

The markets are now awaiting the minutes of the Federal Open Market Committee’s (FOMC) March policy meeting, due on Wednesday, for cues on Fed’s future monetary policy stance.

Capping bullion’s gains were strong Asian shares, which rose to seven-month highs as investors cheered a rebound in US payrolls and hints of more stimulus in China.

Gold had slipped to its lowest since January 25 at $1,280.59 in the previous week, mainly pressured by rising equities on optimism around the Sino-US trade deal.

US and Chinese negotiators are scheduled to resume discussions this week to try to secure a pact to end the year-long tit-for-tat tariff battle.

A rally in equity markets has led investors to liquidate their gold investments, analysts said.

Hedge funds and money managers slashed their bullish wagers in Comex gold in the week to April 2, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, also fell as much as 3% in the previous week, its biggest weekly percentage decline since end-November 2016.

Among other precious metals, spot platinum was last up 1.1% at $904.44 an ounce, after touching its more-than-ten-month high of $912.90 earlier in the session.

Palladium rose 0.7% to $1,378.96 and silver gained 0.5% to $15.15.

Reuters