Gold price edges up as equities retreat

New York (Mar 3)  Gold edged back above $1,240/oz on Thursday as the dollar eased and equity markets retreated, sharpening appetite for the metal as an alternative asset, but moves were muted ahead of Friday’s US payroll data.

Spot gold was up 0.25% at $1,242.96/oz by 12.35pm GMT, while US gold futures for April delivery were up $2/oz at $1,243.80.

Gold has risen 17% this year, hitting a one-year high of $1,260.60/oz in February as stock market volatility picked up on the fear over the health of the global economy.

Moves towards looser monetary policy in China, Japan and the eurozone this year in the face of faltering growth, and a growing conviction that the Federal Reserve will put off further rate hikes, have prompted some investors to seek out gold.

"There’s a sense that the debt problems aren’t going to go away, and that’s why people have been moving to (gold as a) safe-haven asset," Sharps Pixley CE Ross Norman said.

"There’s a sense that the crisis is ongoing, and the central banks are perhaps fallible."

The dollar edged down and European stocks and oil prices fell on Thursday, shoring up support for gold, which has seen strong investment demand so far this year.

Inflows into gold-backed exchange-traded funds, which issue securities backed by physical metal, have risen sharply, with holdings of the largest, SPDR Gold Shares, hitting 788.6 tonnes on Wednesday, the most since September 2014.

Traders were awaiting the US nonfarm payroll report for February on Friday. Payrolls are estimated to have risen by 190,000 in February, according to a Reuters poll of economists.

The report is seen by many as a barometer for the health of the US economy and a strong reading may revive the expectation that the Federal Reserve will press ahead with more rate hikes this year.

Gold is highly sensitive to rising US rates, which lift the opportunity cost of holding nonyielding bullion, while supporting the dollar, in which it is priced.

"There is likelihood of positive surprise on Friday and that will (weigh) on gold," Michael McCarthy, chief market strategist at CMC Markets, said.

Silver was up 0.1% at $14.94/oz, while platinum was up 0.8% at $939.19/oz and palladium was up 0.8% at $519.50/oz.