Gold steadies above two-month low ahead of US jobs data

New York (Oct 6)  Gold steadied above a two-month low on Friday ahead of hotly anticipated U.S. payrolls data, but stayed on track for a fourth straight weekly loss as the dollar
rose to its highest in more than seven weeks.

The metal is facing its longest run of weekly declines this year after expectations for another hike in U.S. interest rates drove the dollar and U.S. 10-year Treasury yields sharply higher.

Spot gold  was at $1,267.46 an ounce at 0930 GMT, little changed from $1,267.65 late on Thursday but off an earlier low of $1,266.25. U.S. December gold futures were down $2.70 an ounce at $1,270.50.

The metal has retreated nearly 1 percent this week. World stocks rose to a record high on Friday and the dollar hit a seven-week peak, riding on economic
optimism ahead of a U.S. job report later in the day.
          
"It's quite a challenging environment for gold at this point, as the market refocuses on a more positive story," Oxford
Economics analyst Daniel Smith said.
    "The dollar is stronger than it was a month ago as well, so
all those things are creating quite significant headwinds."
    With further interest rate rises largely dependent on the
health of the U.S. economy, data points such as Friday's
non-farm payrolls reading for September are being closely
watched.
    Gold is highly sensitive to rising U.S. interest rates, as
these increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar, in which it is priced.
    The U.S. employment data is expected to show a slowdown due
to hurricanes Harvey and Irma. Payrolls are expected to have
increased by 90,000 jobs last month, a Reuters survey of
economists showed, after rising by 156,000 in August.
    "Investors will be casting a keen eye on (the) non-farm
payroll data release, given the relative strength in equities
and the dollar," MKS said in a note. "A strong NFP reading could
have gold testing the 200-day moving average level at $1,252."
    Investor interest in gold has been muted. Holdings of the
world's largest gold-backed exchange-traded fund, SPDR Gold
Shares      , have fallen 13.6 tonnes so far this week, their
first weekly outflow in nine weeks and the largest since late
July.          

Silver was up 0.1 percent at $16.59 an ounce.
Platinum was 0.4 percent higher at $916.30 an ounce, and
palladium was up 0.1 percent at $939.60 an ounce.
    Palladium maintained its premium over platinum, which it
moved into last week for the first time since 2001. The spread
between the two reached $28 an ounce on Friday.

Reuters