London: Gold eased on Friday ahead of U.S. payrolls data but remained on track for a sixth straight weekly gain as concerns over Britain’s vote to leave the European Union lent support.
The payrolls numbers are seen as a key barometer of U.S. economic health with implications for U.S. monetary policy. A weak reading will shore up the view that the Federal Reserve will hold off on further increases to interest rate.
Lower rates tend to boost gold prices because they cut the opportunity cost of holding non-yielding bullion while weighing on the dollar, in which it is priced.
Spot gold was down 0.3 percent at $1,355.96 an ounce at 0930 GMT, while U.S. gold futures for August delivery fell $4.30 to $1,357.80.
The U.S. Labor Department’s jobs tally, due at 1230 GMT, is likely to show that non-farm payrolls increased by 175,000 jobs last month after a meagre 38,000 gain in May, a Reuters survey of economists showed.
“If payrolls come in below expectations, gold will move higher again,” ABN Amro analyst Georgette Boele said. “Our U.S. economists expect (a reading of) 150,000, which is somewhat below consensus.”
If the number comes in at that level, gold could move back towards this week’s more than two-year high of $1,374.91, she said. “A dreadful number, and prices could move towards $1,400.”
Equities struggled for direction on Friday and U.S. Treasury yields remained anchored close to this week’s record low, marking their longest run of consecutive weekly declines in four years ahead.
Investors poured the most money into United States-based funds invested in precious metals since February, data from Thomson Reuters’ Lipper service showed on Thursday.
“The market is very long, with COMEX open interest above 650,000 lots,” MKS said in a note.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell by a little more than four tonnes on Thursday to 978.29 tonnes, having notched the biggest daily inflow in six years on Tuesday.
High prices weighed on physical gold demand among Asian consumers. Gold discounts in India soared to a record high of up to $100 an ounce this week as prices in the world’s second-largest bullion consumer hit their highest in nearly three years.
Silver was flat at $19.66 an ounce, platinum fell by 0.5 percent to $1,080.60 and palladium dipped 0.4 percent to $605.40.