Gold inches lower as dollar rebounds ahead of US jobs data

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.44% at 98.25 in early European trading, off Thursday’s one-month trough of 97.60.

Gold prices have been hovering at their lowest level in almost six years on anticipation that the Federal Reserve would soon raise rates for the first time since 2006.

Yellen was also quoted hinting an imminent rise in interest rate from near-zero rates on the USA economy recovering from seven-year recession, as evident from job growth since October.

Globally, gold lost 0.7 per cent to USD 1,046.44 an ounce, the lowest since February 2010 and silver fell 1.2 per cent to USD 13.84 an ounce, the lowest price since August 2009 in Singapore, while in London, the precious metal was down 0.39 per cent at USD 1,049.10 an ounce.

In addition, investors appear to be betting too much on USA raising interest rates, yet there are those who believe that a rush decision to raise interest rates could send the country’s economy into a downward tantrum, in which case gold bulls would benefit magnificently. The opportunity cost of holding gold, a non-interest-paying asset, would rise.

The Fed should use the communication tools at its disposal at its December meeting to spell out a gradual pace of rate increases, Chicago Federal Reserve President Charles Evans had said on Tuesday.

The US Dollar Index initially rallied during the day on Thursday, but then turned back around to fall significantly.

The data came shortly after the Department of Labor said the number of individuals filing for initial jobless benefits in the week ending November 28 increased by 9,000 to 269,000 from the previous week’s total of 260,000.

The local central bank simply seized he losses suffered by other regional currencies, in particular the South Korean won, as a cause to boost the US dollar, dealers said. ADP Research Institute released a report today which showed that companies in the United States have added a lot more workers in November than what was projected by analysts. Even so, investors are generally bearish on gold and have withdrawn assets from exchange-traded funds backed by the metal nearly every day in the past month. Platinum for January delivery rose 15.1 dollars, or 1.81 percent, to close at 847.50 dollars per ounce.

Spot silver rose 0.2 percent to $14.1365 an ounce.