Gold dips to near 3-month low on dollar strength; U.S. data eyed

Singapore (Sept 5)  Gold fell to its lowest in nearly three months on Friday before recovering modestly and was poised to post its third weekly drop in four, as a strong dollar and an optimistic view of the U.S. economy prompted selling in bullion.
 The metal is under pressure as the euro languished near a 14-month low versus the dollar on Friday, struggling to regain its footing after the European Central Bank delivered a fresh round of stimulus and promised even more if needed.
    Investors also refrained from taking big positions on Friday
as U.S. non-farm payrolls data due later in the day is expected
to give further clues about the world's largest economy and the
timing of the Federal Reserve's move to raise interest rates.  
    Spot gold fell to $1,256.90 an ounce - its lowest
since June 10, before ticking up 0.2 percent to $1,263.50 by
0622 GMT. The metal has lost nearly 2 percent this week. 
    "The small uptick today is probably some bargain hunting,
but the underlying trend is still very bearish, especially with
a very strong dollar move," said one Singapore-based precious
metals trader.
    A stronger greenback is a setback for dollar-denominated
gold as it makes the metal more expensive for users of other
currencies.
    "The jobs data today is likely to have a bigger impact on
prices depending on how strong it is. A solid break below $1,260
could lead to a sharp drop as the next support level is only at
$1,230," the trader said.
    Other precious metals were also under pressure due to the
dollar move. Silver, platinum and palladium
were all poised for weekly declines.
    Gold was also hurt after data on Thursday showed that U.S.
companies hired workers at a steady clip in August and services
sector activity accelerated to a 6-1/2-year high, assurances the
economy was on track for sturdy growth in the third quarter.
 
    "The key U.S. payrolls release is expected to be a strong
print which may prompt further selling in gold late in the day
in today's session," Victor Thianpiriya, analyst at ANZ, said in
a note.
    SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund and a good measure of investor sentiment,
said its holdings fell 4.78 tonnes to 785.73 tonnes on Thursday
- the biggest one-day drop since mid-April.
    In the physical markets, buying picked up slightly due to
the lower prices. Premiums in China, the top buyer of gold, rose
to about $4-$5 an ounce from $3 in the previous session.

Source: Reuteers