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Gold clings above $1,700/oz as markets brace for U.S. jobs test

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Gold rose above the important

psychological level of $1,700 on Friday as the dollar paused

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while investors awaited key U.S. jobs data, amid expectations

the Federal Reserve would continue with steep interest rate

hikes in coming months.

Spot gold rose 0.5% to $1,704.40 per ounce by 1116

GMT. The metal was down about 2% for the week so far, having

touched a six-week low of $1,687.60 on Thursday.

U.S. gold futures were up 0.4% to $1,715.50.

“The dollar is somewhat lower this morning which is helping

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gold regain lost ground after yesterday’s decline. There might

also be some bargain hunting in the market after prices dropped

to $1,700,” Carsten Menke, an analyst with Julius Baer said.

But overall sentiment in the gold market has turned bearish

and prices could easily drop back below $1,700 should the labor

market report be better than expected as this would prompt

further dollar-driven and sentiment-driven selling, Menke added.

The dollar index dipped 0.3% but was not far from a

20-year peak.

After a host of recent U.S. economic data confirmed that its

economy was not headed into recession, investors now wait for

the nonfarm payrolls report for August at 1230 GMT.

“Gold doesn’t have much space for a rebound as markets are

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pricing in a big increase in interest rates,” said Carlo Alberto

De Casa, external analyst for Kinesis Money.

“Investors want to understand how hawkish the Fed can be and

a solid jobs data will heap more pressure on the central bank to

raise rates, which is negative for gold.”

Higher interest rates increase the opportunity cost of

holding the non-yielding bullion.

In physical markets, gold premiums jumped in top consumer

China, while a drop in local prices boosted demand in India.

Elsewhere, spot silver rose 0.2% to $17.88 per ounce,

platinum gained 0.6% to $833.47, and palladium

added 1.8% to $2,048.57.

(Reporting by Arundhati Sarkar in Bengaluru

Editing by Tomasz Janowski and Louise Heavens)



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