Gold Steady Ahead of U.S. Jobs Data
Reuters
Gold was steady on Friday as investors stayed on the sidelines ahead of a U.S. jobs report due later this session, and as risk appetite picked up in the wider markets, knocking the metal's safe haven appeal a notch.
But the metal was still well bid above $1,600 level, with worries over a worsening euro zone debt crisis and sovereign funding pressures providing investors with a strong case for holding bullion.
Spot gold edged up 0.02 percent to $1,622.39 an ounce by 1017 GMT, on course for a weekly rise of 3.4 percent, its strongest in a month.
U.S. gold gained 0.2 percent to $1,623.40.
"We've seen risk on this morning and that has taken a bit of steam out of gold, again indiciating it has become a safe haven play," said Ole Hansen, senior manager at Saxo Bank.
But he added: "Its been a good start to the year, we're still not out of the woods in terms of the technical picture but gold has been holding above $1,600, indicating we could have some further upside potential."
European equities rose earlier amid hopes U.S. jobs data due later will brighten the economic outlook, after a report Thursday showed private-sector hiring surged last month and unemployment claims fell.
Bullion has parted way with riskier assets, with which it had moved in tandem over the past few months, as its safe-haven appeal received a half boost from reviving liquidity at the beginning of the new year.
"Liquidity is back in the market," said a Shanghai-based trader. "With the Europe outlook still grim, investors would prefer to put their dollars in some safety assets, such as gold."
Technical analysis suggested spot gold could retrace to $1,596.24 an ounce during the day, said Reuters market analyst Wang Tao.
Although economic data out of the United States in recent weeks has shown solid progress in the fourth quarter, analysts said the global economy will remain overshadowed by the euro zone debt crisis.
The euro hit at a 16-month low versus the dollar on Friday before recovering slightly, but further falls are expected as worries grow about a worsening euro zone debt crisis and sovereign funding pressures.
A weak euro usually weighs on dollar-priced gold as it makes it costly for non-U.S. investors. However, the metal has this week held its own in the face of a strong dollar as its safe haven appeal has trumped all.
Analysts expect while strong U.S. jobs data might help risk sentiment later this session, it may weigh further on the euro versus the dollar as investors focus on the divergence between the U.S. and euro zone economies.
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