Gold hit its lowest in nearly two months in range-bound trade on Friday, as the dollar climbed to a more than seven-week high ahead of key US jobs data later in the day.

Spot gold was unchanged at $1,267.71 an ounce at 0705 GMT, after hitting its lowest since August 9 earlier in the session. It was down 0.9 per cent for the week and headed for a fourth straight weekly decline. US gold futures for December delivery were down 0.2 per cent at $1,270 per ounce.

“The dollar is strong. That is one reason why gold is rangebound. Markets are expected to hold this way until non-farm payrolls is out. We might see some action only then,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

US tax reforms

Asian shares rose, tracking Wall Street gains, and the dollar touched an over seven-week high against a basket of currencies on fresh signs of economic growth and hopes for progress on US tax reforms, with traders looking to US jobs data for near-term catalysts.

“Investors will be casting a keen eye on tonight's non-farm payrolls data release, given the relative strength in equities and the dollar, a strong NFP reading could have gold testing the 200 DMA level at $1252,” MKS PAMP said in a note.

The US employment data for September is expected to show a slowdown due to the impact of Hurricane Harvey and Irma.

“The rebound of the dollar has been quite strong and may need to pause,” said Samson Li, an analyst with Thomson Reuters GFMS.

“Even if the dollar index may break over 94, further upside is probably limited, and a consolidation (softer dollar) will likely follow, before strengthening again towards the end of Nov/start of Dec when the market is expecting another rate hike.”

Fed rate hikes

Markets are largely expecting the US Federal Reserve to raise interest rates for the third time this year, in December.

The Fed will need to raise rates further to keep the economy on track to full employment and the central bank's 2 per cent inflation goal, Kansas City Fed President Esther George had said on Thursday.

Gold is highly sensitive to rising rates, as these lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Spot gold may slide to $1,260 per ounce as it has broken a support at $1,270, according to Reuters technicals analyst Wang Tao.

In other precious metals, silver was flat at $16.58 an ounce. Platinum edged up 0.2 per cent to $913 an ounce, while palladium eased 0.1 per cent to $938 an ounce.

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