Gold Set for Biggest Weekly Drop Since March Before Jobs Report

Gold Prices Are Still Solid
  • Traders await U.S. jobs data for clues on next rate increase
  • Bullion being supported by ETP buying, Commerzbank says

Gold headed for its biggest weekly decline since March as investors awaited U.S. jobs data for more clues on when the Federal Reserve will raise interest rates.

Bullion was little changed in London on Friday before a Labor Department report that’s forecast to show the third straight month of payroll gains of at least 200,000. After topping $1,300 an ounce for the first time in more than a year on Monday, the metal has fallen 1 percent this week as the dollar rebounded.

Gold rallied this year on speculation the Fed will be slow to tighten monetary policy amid global risks to economic growth. While traders put the odds of a rate increase next month at just 10 percent, some central bank officials have said a June hike is possible. Four regional Fed presidents stressed Thursday that policy would be data dependent.

“Participants are likely to be focusing their attention today on the publication of the U.S. labor market data,” Commerzbank AG said in a report. The metal is being supported by continued purchases through exchange-traded products, the bank said.

Bullion for immediate delivery added 0.2 percent to $1,280.45 an ounce by 10:04 a.m. in London, according to Bloomberg generic pricing. The weekly decline has cut this year’s advance to 21 percent.

Lower borrowing costs keep gold competitive against interest-bearing assets such as the dollar or bonds. Traders are assigning a less than 50 percent chance that the U.S. central bank will raise rates in 2016, down from 93 percent at the start of this year.

In ETPs and other metals:

  • Gold ETP holdings expanded 4.2 metric tons to 1,793.3 tons as of Thursday, the highest since December 2013, data compiled by Bloomberg show. Assets have increased for eight straight days.
  • Silver added 0.2 percent to $17.3699 an ounce in London, cutting this week’s loss to 2.7 percent.
  • Platinum was little changed and palladium rose 0.5 percent.
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