Gold headed for a third straight weekly drop as the dollar rallied ahead of key US jobs data, which could provide further clues on the size of the Federal Reserve’s next interest-rate hike.
(Bloomberg) — Gold headed for a third straight weekly drop as the dollar rallied ahead of key US jobs data, which could provide further clues on the size of the Federal Reserve’s next interest-rate hike.
The metal edged higher Friday as the dollar eased back from a record notched in the previous session. Bullion is still trading near a six-week low, under pressure from higher Treasury yields that damp the appeal of the non-interest bearing precious metal.
The jobs report later Friday is expected to show robust payrolls growth for August and follows stronger-than-expected US manufacturing data. Wage growth is also expected to stay strong even as the Fed tries to damp inflationary pressures with tighter monetary policy.
Fed Bank of Atlanta President Raphael Bostic said Thursday the campaign to cool inflation was still not complete, noting that the current pace was a long way from the US central bank’s 2% goal. Traders increasingly anticipate another large 75 basis points rate rise to contain price pressures at the next policy decision meeting Sept. 20-21.
“Gold is becoming a punching bag as surging Treasury yields have rejuvenated the king dollar trade,” said Edward Moya, a senior market analyst at Oanda Corp. There’s “no reprieve in sight for gold until the move higher with global bond yields is over,” he added.
Spot gold rose 0.3% to $1,702.45 an ounce as of 9 a.m. in London, and is down 2% this week. Prices fell to the lowest level since July 21 on Thursday. The Bloomberg Dollar Spot Index slipped 0.2% after a 0.7% gain in the previous session. Silver, palladium and platinum advanced.
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