Gold edges higher ahead of US jobs report

Gold on Friday was hovering near a two-week high hit in the previous session as investors awaited the US jobs report to gauge the health of the economy after grim economic indicators raised the prospects of more rate cuts by the Federal Reserve.

Lower interest rates would further weigh on bond yields and boost demand for non-yielding bullion, which hit a near two-week peak in the last session.

Spot gold was steady at $1,715.23/oz, as of 3.15am GMT, having hit its highest since April 27 at $1,721.76 in the previous session. US gold futures added 0.1% to $1,727.

The metal gained about 2% on Thursday on the back of bleak US economic data, which along with uncertainties over global economic recovery and US-China relations, lifted bullion higher by about 0.9% so far this week.

“Gold is still bouncing around in the $1,650 to $1,750 an ounce range of the last month or so. Serious investors’ interest should not be piqued until gold comprehensively challenges either of those levels,” said Jeffrey Halley, senior market analyst at Oanda.

Millions more Americans sought unemployment benefits last week, with the total number of people who have filed claims since March 21 rising to about 33.5-million, data showed on Thursday.

US nonfarm payrolls data, due at 12.30pm GMT, is forecast to have plunged by a historic 22-million in April, which would blow away the record dive seen during the 2007-2009 recession.

“Funds futures fell overnight, signalling lower rates ahead that fed through to the US dollar, which saw profit taking on longs overnight,” said Halley, adding that this created a positive environment for gold.

The dollar index turned negative, while the US Treasury yields fell from three-week highs, with the two-year yields dropping to record lows.

Financial markets began pricing in a negative US interest rate environment for the first time on Thursday, while the Bank of England kept the door open on Thursday for more stimulus in June.

Central banks around the world have slashed interest rates over the past few months and unveiled unprecedented amounts of stimulus to help soften the blow to the world economy from the pandemic.

Gold tends to benefit from widespread stimulus measures because it is widely viewed as a hedge against inflation and currency debasement.

Elsewhere, palladium jumped 1.8% to $1,889.57/oz and platinum rose 0.6% to $768.37/oz. Silver fell 0.8% to $15.38/oz, after rising to a three-week peak in the previous session. — Reuters