Gold up after US jobs report release

Gold’s marking time ahead of the U.S. employment report “may be the calm before the storm, with probability calling for another leg lower to the 2010 low of $1,044”, according to technical analysts at ScotiaMocatta.

Prices rose for a second straight day on Friday, even as a report showing an improving U.S. labor market fueled speculation that the economy is strong enough to withstand higher interest rates from the Federal Reserve. It had fallen to $1,077 on July 24, its weakest since February 2010.

Expectations that the Fed could increase rates at its next policy meeting in September gained ground this week after Atlanta Federal Reserve President Dennis Lockhart said only a “significant deterioration” in the US economy would make him not support a rate rise next month.

The dollar reversed earlier losses and gained 0.3 percent against a basket of leading currencies, while global shares fell, against which gold is seen as an alternative investment. The metal has lost 7.5 percent this year so far, as investors positioned themselves for an interest rate increase in the United States this year.

The most active gold contract for December delivery dropped $5.1, or 0.47 percent, to settle at $1,085.60 per ounce. A slew of upbeat US economic data, including Thursday’s positive weekly jobless claims, shows “there’s not really much to stop the Fed from increasing rates”, said Ric Spooner, chief market analyst at CMC Markets in Sydney.

The number of Americans filing new applications for unemployment benefits rose less than expected last week, suggesting labour market conditions are continuing to tighten.

Investing through the giant SPDR Gold Trust (NYSEArca:GLD) shrank again Wednesday, cutting the amount of bullion needed to back the fund’s shares another 3 tonnes to a fresh 7-year low of 668 tonnes, down 43 since the end of Q2.

Silver rose 1 per cent to $14.72 an ounce.

Platinum futures for October delivery climbed 0.6 percent to $962.20 an ounce on the New York Mercantile Exchange, while palladium futures for September delivery slid 0.5 percent to $596.90 an ounce.