Gold Price Falls Ahead of U.S. Jobs Data

October 2, 2015

London (Oct 2)  Gold prices were lower on the London spot market Friday, ahead of U.S. nonfarm payrolls data that is expected to offer fresh support for the view that interest rates will rise before the end of this year.

Spot gold was down 0.6% at $1,106.41 a troy ounce in morning European trade, a two-and-a-half-week low.

Economists expect strong growth of 200,000 jobs in September, versus a net gain of 173,000 in August, and the jobless rate to stay steady at 5.1%. This would signal further robustness in the U.S. economy and likely shore up a decision by the Federal Reserve to raise interest rates, analysts say.

A rate increase would most likely boost the dollar and pressure the dollar-denominated precious metal lower by making it more expensive for those holding other currencies to buy.

"A strong print holds downside potential for gold and the risk is that there may be limited immediate support as participants in India are out today for a public holiday while participants in China have been out from yesterday for the Golden Week," said UBS.

Thin trading volumes from Asia wasn't helping gold's cause. Chinese traders and investors were away from their desks for a week long holiday. China and India together account for more than 50% of global gold demand. Asian buyers typically enter the market to pick up the metal at cheap prices.

Friday's moves underscore how U.S. interest rate expectations have come to dominate trade in the precious metal, which recently appears to have lost its status as a safe-haven, some analysts say. Worries over potential escalation in Syria, following Russia's intervention in the years' old civil war, was moving other commodity prices, but not gold.

Meanwhile, platinum fell below the key level of $900 an ounce on Friday for the first time since the recession, as pressure from the Volkswagen AG emissions scandal hammered a precious metal already wounded by high supply and lackluster demand. Spot platinum was down 0.5% at $895.60 an ounce.

Some market players said that anticipation of the U.S. nonfarm payrolls was also moving the platinum price.

"The whole market is looking for the U.S. nonfarm payrolls data," said Stephan Mueller, head of product management and development at GAM Investment Management Ltd., which has 124.2 billion Swiss francs ($126.7 billion) in assets under management.

Among the other precious metals, spot silver was down 0.3% at $14.461 an ounce, while spot palladium was up 2.6% at $691 an ounce.


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