Gold steadies above $1,250/oz before U.S. jobs report
London (June 6) Gold steadied above $1,250 an ounce on Friday ahead of a key U.S. jobs report, having rallied nearly 1 percent in the previous session after the European Central Bank unveiled measures to boost the euro zone economy.
The ECB outlined a four-year 400 billion euro ($545 billion) scheme giving banks that have been holding back credit an incentive to boost lending to businesses, and pledged to do more if needed.
The bank also noted that euro zone inflation has been stuck in "the danger zone" below 1 percent since October.
Gold tends to benefit from ultra-loose monetary policy, which cuts the opportunity cost of holding non-yielding assets such as bullion.
Spot gold was at $1,253.70 an ounce at 0917 GMT, little changed from $1,253.29 late on Thursday. U.S. gold futures for August delivery were up 90 cents an ounce at $1,254.20.
David Govett, head of precious metals at Marex Spectron, said Thursday's move higher was chiefly a result of short covering, as traders who had bet on falling prices ahead of the ECB meeting moved to square their positions.
"The market went into the speeches (and) figures short and got caught," he said. "We'll now head sideways until the nonfarm payrolls. I think we're in a range again (of) $1,240-1,270 ... I don't see it breaking out of that."
The ECB's promise of another tidal wave of deflation-dousing liquidity boosted European stocks and bonds on Friday, but investors retained a note of caution ahead of the latest U.S. employment report.
SOLID PACE OF HIRING
Economists polled by Reuters returned a median forecast for nonfarm payrolls to have increased by 218,000 last month, as U.S. employers likely maintained a solid pace of hiring, returning employment to its pre-recession level.
The figures are a closely watched barometer of the health of the U.S. economy. A strong reading will likely reassure investors that the Federal Reserve will keep tapering its bullion-friendly monetary stimulus programme, undermining gold.
The metal is likely to hold steady ahead of the release of the numbers at 1230 GMT, analysts said.
"For potential longs ... we think that most are likely waiting for this event risk to pass, choosing to buy into strength and momentum - should payrolls disappoint - instead of going long early and running the risk of an upside surprise in U.S. data," UBS said in a report.
Among other precious metals, platinum added to gains after South Africa's AMCU union president said the union's 12,500 rand ($1,200) per month wage demand was "non-negotiable", dashing hopes of a speedy resolution to a five-month stoppage.
Spot platinum was up 0.4 percent at $1,442.70 an ounce, while spot palladium was flat at $836.10 an ounce.
"If after further arbitration the strike is not resolved the government has the option of declaring the strike illegal," HSBC said in a note. "The apparent stalemate has boosted platinum group metal prices but we are mindful that any bearish news could take prices lower, at least in the near term."
South Africa is the biggest producer of platinum and second-biggest producer of palladium.
Spot silver was up 0.4 percent at $19.08 an ounce.
Silver has been the best-performing precious metal this week, rising just over 2 percent, as buyers took advantage of its drop to 11-month lows last week to stock up.
Source:EconomicTimes
