Gold price hits lowest level since January ahead of US jobs data

London (Mar 10)  Gold fell to its lowest in more than five weeks on Friday as traders took to the sidelines ahead of US payrolls data, which would be closely watched for clues on the outlook for US monetary policy.

Growing expectations that the US Federal Reserve would raise interest rates in March following a better-than-expected ADP payrolls report on Wednesday have pushed gold down 3% this week, potentially its biggest weekly loss in four months.

The metal hit a low of $1,194.55 an ounce on Friday, after slipping below $1,200 an ounce in the previous session for the first time since January 31. Spot gold was down 0.38% at $1,196.19 an ounce at 10.47am GMT, while US gold futures for April delivery were down $6.80 an ounce at $1,196.40.

"We had a really quite phenomenal number in the ADP payrolls on Wednesday, and when you get such a big move in private payrolls, it would be highly surprising if the official numbers moved lower," Mitsubishi analyst Jonathan Butler said. A Reuters survey of economists predicted that nonfarm payrolls probably rose by 190,000 jobs in February.

Fed chair Janet Yellen said last week the central bank was poised to lift rates provided jobs and inflation data held up, comments seen as cementing plans for an increase at the Fed’s March 14-15 meeting. Gold is highly sensitive to rising US interest rates as these increase the opportunity cost of holding nonyielding bullion, while boosting the dollar, in which it is priced.

Source: BusinessDay