Gold inches up as dollar eases in face of tepid US employment data

BENGALURU — Gold edged higher on Friday, on track for its biggest weekly gain in six, as the dollar softened after data showed US job growth slowed more than expected last month and a slide in stock markets burnished the appeal of bullion as a safe haven.

Spot gold was up 0.2% at $1,201.82 an ounce by 13:45 p.m. EDT (1745 GMT), and was on track to rise about 0.8% as last week closed, the most since the week of Aug. 24. US gold futures settled up $4, or 0.3%, at $1,205.60.

“The weaker-than-expected jobs data is supporting the overall current mood but the numbers were not disappointing enough to trigger fresh buying,” said Heraeus precious metals trader Alexander Zumpfe. “However, the data helped gold to establish itself above the pivotal $1,200 mark and I wouldn’t rule out a test of this week’s high at $1,208.”

The dollar weakened and stock markets fell after data showed US nonfarm payrolls increased by 134,000 jobs in September, the fewest in a year.

However, the Labor department’s monthly employment report also showed a steady rise in wages, suggesting moderate inflation pressures, which could allow the Federal Reserve to maintain a path of gradual interest rate increases. A weaker dollar makes bullion less expensive for buyers using other currencies. But rising interest rates increase the opportunity cost of holding bullion.

Gold remains “relatively cheap, so attractive to value-based investors and others looking for a hedge” against uncertainty, said Societe Generale analyst Robin Bhar. Gold is seen as a safe store of value during times of political and economic uncertainty.

Despite last week’s gains, gold prices have fallen more than 12% from a peak in April largely due to strength in the dollar, which has benefited from a vibrant US economy, rising US interest rates and fears of a global trade war.

“The gold markets are still very short, which is highly unusual. In such a situation, a short covering rally can be expected if there’s anything to stimulate the market,” said Walter Pehowich, executive vice-president of investment services at Dillon Gage Metals. “Overall, it’s just a waitand-see attitude to see what happens in the run up to the midterm elections in the United States” in November.

Among other precious metals, spot silver rose 0.3% to $14.61 and palladium gained over one percent to $1,069.40. Platinum inched 0.3% down to $819.49 an ounce. —