Gold at 1-month peak as bond yields dip ahead of U.S. jobs data

LONDON (Aug 5) - Gold prices steadied at a one-month high on Friday, ahead of a much awaited U.S. jobs data, as a retreat in Treasury yields and growing recession fears supported the safe-haven metal and kept it on track for a third straight weekly rise.

Spot gold was flat at $1,790.42 per ounce, as of 0701 GMT, after hitting its highest level since July 5. Prices are up 1.5% this week.

U.S. gold futures was little changed at $1,805.80.

“Gold continues to benefit from a combination of a weaker dollar that has been driven by falling U.S. bond yields as markets continue to price in peak inflation and a recession,” OANDA senior analyst Jeffrey Halley said.

The yield on 10-year Treasury notes slipped, reducing the opportunity cost of holding non-interest bearing gold.

The dollar crept higher but struggled to recoup its losses after falling by its sharpest pace in two weeks on Thursday.

The market’s focus is now on monthly U.S. non-farm payrolls report for July due at 1230 GMT that could offer more clarity on the Federal Reserve’s aggressive tightening plans to combat inflation. Economists expect an increase of 250,000 jobs.

“A soft payroll number will support gold’s upward momentum as it is likely to result in another bout of dollar weakness as yields fall. Gold should continue grinding towards the $1,900.00 region in the coming sessions,” Halley added.

The Bank of England raised interest rates by the most since 1995 in an attempt to smother surging inflation.

Sino-U.S. tensions remained in focus after China fired multiple missiles near Taiwan on Thursday, a day after U.S. House of Representatives Speaker Nancy Pelosi made a solidarity trip to the self-ruled island.

Spot silver rose 0.3% to $20.21 per ounce, and palladium climbed 2.1% to $2,107.16.

Platinum gained about 1% to $935.14 per ounce and was heading for its third consecutive weekly rise.

REUTERS