Gold price falls to 2-week low ahead of U.S. jobs data
London (Oct 2) Gold fell to two-week lows on Friday, heading for its biggest weekly loss since early March ahead of U.S. payrolls data which will be closely watched for clues on the timing of an expected interest rate rise.
The Federal Reserve has tied the prospect of a rate hike to the strength of U.S. data. An increase would tend to weigh on gold, which benefits from ultra-low rates that cut the opportunity cost of holding non-yielding bullion.
Spot gold was down 0.6 percent at $1,107.00 an ounce at 0921 GMT, off an earlier low of $1,106.45, while U.S. gold futures for December delivery were down $7.40 an ounce at $1,106.50.
Gold is down 3.4 percent this week, its biggest weekly decline in seven months.
"Short term (gold) is very much under pressure," Standard Chartered analyst Paul Horsnall said. "Part of that's coming from the run-in to the payrolls today. We're positive on payrolls - we think that data will be good, but it won't be good enough to justify a (rate-hiking) cycle that goes much beyond 1 percent."
A slow pace to a U.S. interest rate increase should eventually take some pressure off gold, he said.
Economists polled by Reuters expect the report to show U.S. employers hired 203,000 workers in September, up from August's 173,000 increase.
Among other precious metals, platinum slumped to $888 an ounce on Friday, its lowest level since December 2008, and was later down 0.5 percent at $895.50 an ounce. It has fallen 5 percent this week, its biggest weekly drop in a year.
Platinum has been hit by revelations that Volkswagen falsified U.S. vehicle emission tests, which some investors believe could affect demand for diesel cars. Platinum is widely used in auto catalysts, particularly for diesel engines.
"News about the VW investigations has amplified the negative sentiment (towards platinum), even though it's probably too early to appropriately gauge the impact," UBS said in a note.
Meanwhile, palladium bucked the decline in other precious metals to rise 2.2 percent to $687.60 an ounce, having earlier touched a three-month high of $693.50 an ounce. It was headed for its fourth straight weekly gain, its longest such winning streak since June-July 2014.
The metal, mainly used in catalysts for gasoline engines, was boosted by data showing strong car sales from major automakers. It has also benefited from some expectations that demand for gasoline cars could increase after the Volkswagen scandal.
Silver was down 0.4 percent at $14.41 an ounce
Source: Reuters
