Gold eyes biggest daily gain in two months as dollar retreats

GOLD was headed for its biggest daily rise in two months on Friday, clawing away from a fourmonth low hit in the previous session, helped by a pullback in the dollar and as some investors covered their short positions.

Spot gold rose 0.7 per cent to US$1,279.47 per ounce and was set for its biggest percentage gain since March 8. US gold futures settled 0.7 per cent higher at US$1,281.30 an ounce.

The metal on Thursday dipped to US$1,265.85, its lowest since the end of December.

“We are seeing a short-covering rally after a sell-off during the week. We also saw some good physical demand at price levels below US$ 1,270,” said David Meger, director of metals trading at High Ridge Futures.

“The dollar is weak, which is also helping gold,” he added.

Despite a strong US jobs report, the dollar was down 0.3 per cent, as traders focused on the weaker aspects in the report.

The US wage gains did not accelerate as expected last month, holding at a reading that is consistent with moderate inflation.

A moderate pace of wage growth indicated that there would not be a rate hike anytime soon, in turn boosting appeal for the noninterest bearing metal, said an analyst based in New York.

Lower interest rates reduce the opportunity cost of holding the bullion.

Despite the gains, gold is still on track to post a weekly decline of about 0.5 per cent after US Federal Reserve signaled little appetite to adjust interest rates in the near term.

However, two Fed officials said on Friday they were increasingly worried about weak inflation, an indication that some US central bankers see a growing case for a future interest rate cut even as others push for continued patience.

Market participants were also keeping a close watch on USChina trade talks, anticipating a resolution to the year long tariff war between the world’s two largest economies.

US President Donald Trump said on Friday the US- China trade negotiations are going pretty well.

Reflecting investor sentiment toward bullion, holdings in the world’s largest gold-backed exchange- traded fund ( ETF), SPDR Gold Trust, fell about 0.2 per cent to 745.52 tonnes on Thursday, its lowest since Oct. 12.

Among other metals, silver rose 2.2 per cent to US$14.94 per ounce, after falling to a more than four-month low of US$14.52 in the previous session. — Reuters