Gold price firms above 3-1/2 month low after sluggish U.S. jobs data

Singapore( July 3)  Gold ticked up above a 3-1/2 month low on Friday, as sluggish U.S. jobs data tempered expectations for a September rate hike by the Federal Reserve and hurt the dollar.

Spot gold gained 0.2 percent to $1,168.26 an ounce by 0243 GMT. The metal fell to $1,156.85 on Thursday, its lowest since mid-March, but pared losses after U.S. economic data.

For the week, bullion is still down 0.6 percent, its second straight weekly loss, due to gains in the dollar earlier in the week from the Greek debt crisis.
    "The soft U.S. employment data has helped gold for the
moment but I don't see much more upside here unless the dollar
drops sharply," said a precious metal trader in Hong Kong.
    "Liquidity will likely be thin today with the U.S. markets
out, so the next trigger could be Sunday's referendum in
Greece," the trader said.
    U.S. markets will be closed on Friday in observance of
Independence Day.
    Data on Thursday showed nonfarm payrolls rose 223,000 last
month, below expectations. Payrolls growth in April and May was
also revised downwards. At least 432,000 people dropped out of
the labour force.
    Before the data, there had been strong expectations that the
Fed would raise interest rates for the first time in nearly a
decade in September, given recent strong data on consumer
spending and housing.
    But the softer-than-expected jobs data prompted investors to
lower their bets for a September rate hike. The U.S. dollar
index fell from a three-week high.
    Gold has been under pressure all year from uncertainty over
the timing of a rate hike as higher rates could dent demand for
non-interest-paying bullion and boost the dollar.
    SPDR Gold Trust, the top gold-backed exchange-traded fund,
said its holdings fell 0.25 percent to 709.65 tonnes on
Thursday, not too far from a near-six-year low hit last month.
    Despite Thursday's losses, the greenback is on track for a
second straight weekly gain as the Greek debt crisis hurt the
euro, capping gains in bullion.
    Athens defaulted on a loan repayment to the International
Monetary Fund this week. Greece's left-wing government called a
referendum for Sunday after five months of acrimonious talks
with its official creditors over an aid-for-reforms deal broke
down without a deal.
    The crisis could drive more risk-averse money into gold if
Greece leaves the euro zone, or if contagion reaches other
economies in the bloc, such as Italy, Portugal or Spain, traders
said.   

Source: Reuters