Gold steady near 2010 low ahead of U.S. jobs data

LONDON: Gold was flat on Thursday as the dollar steadied and investors awaited U.S. employment data that could bolster prospects of the Federal Reserve raising interest rates as early as next month.


U.S. non-farm payrolls are due on Friday and economists polled by Reuters predict employment in July to increase at the same pace as June’s 223,000 rise.

Spot gold was up just 0.1 percent at $1,085.56 an ounce by 1145 GMT. The metal breached important technical support at $1,100 after a deep rout in late July pushed it as low as $1,077, its weakest since February 2010.

U.S. gold for December delivery was unchanged at $1,085.60 an ounce.

“The only supporting factor for gold is the fact that there is a big short in the market but it needs some piece of news to give gold a $20 boost to above $1,105 to see any meaningful short covering,” Saxo Bank senior manager Ole Hansen said.

“In the medium term, with rising bond yields, EM (emerging markets) currencies collapsing, no safe haven demand and with the dollar potentially going higher on U.S. rate expectations, there is no gold-friendly news out there.”

A looming rise in U.S. rates dims the appeal of non-interest yielding gold, instead pulling more funds towards the dollar, which steadied on Thursday after hitting its highest since April versus a basket of currencies in the previous session.

Data on Wednesday showed U.S. services industry activity at a near-decade high. Separately, U.S. private sector hiring in July rose the least since April.

Strong U.S. employment data on Friday could send gold below $1,080, said Howie Lee, analyst at Phillip Futures in Singapore.

“(That) appears to be a level that many traders have put their stop-loss in because every time it breaches that level there’s a swift decline,” Lee added.

Expectations that the Fed could increase rates at its next policy meeting in September gained ground this week after Atlanta Federal Reserve President Dennis Lockhart said only a “significant deterioration” in the U.S. economy would make him not support a rate rise next month.

But Fed Governor Jerome Powell said policymakers had not yet decided whether to raise rates next month, adding that more recent employment data had been mixed.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 21.47 million ounces on Wednesday, the lowest since September 2008.

In other metals, spot palladium gained 0.9 percent to $596.50 an ounce, while platinum was unchanged at $947.25, both still near multi-year lows hit earlier in the week. Silver was unchanged at $14.50 an ounce.