Gold heads for second weekly gain as US jobs data in focus

[SINGAPORE] Gold headed for a second weekly advance as investors focus on a key jobs report in the US due Friday, following Thursday's Bank of England stimulus package that included its first interest-rate cut in seven years.

Bullion for immediate delivery rose 0.2 per cent to US$1,363.67 an ounce at 2:48 pm in Singapore, after a 0.2 per cent gain on Thursday, according to Bloomberg generic pricing. The metal is up 0.9 per cent this week.

The BOE's stimulus, to contain the fallout from the UK decision to quit the European Union, is the latest measure from central banks and governments to support growth. Weak or negative interest rates have helped push gold 29 per cent higher this year.

The payrolls data will be watched for clues on the timing for the next rate rise by the Federal Open Market Committee. After a report on July 29 showed second-quarter gross domestic product rose less than forecast, the focus will be on the strength of the labour market.

Subdued growth will force the Fed to keep rates steady in 2016, with a single hike seen in 2017, according to BMI Research, which raised its 2017 price outlook by US$50 to US$1,400.

"All eyes are on tonight's US nonfarm payrolls data, but irrespective of the outcome I see little prospect of any potential near-term US rate rise," said Gavin Wendt, director at MineLife Pty in Sydney.

"This means a floor for gold prices and the potential for further near-term gains."

Policy makers will hold off raising rates for at least a year, according to fed funds futures data compiled by Bloomberg, while the probability of a hike in December is about 37 per cent, down from 45 per cent two weeks ago.

Holdings in gold-backed exchange-traded funds added 5.5 metric tons to 2,031.2 tons on Thursday, data compiled by Bloomberg show. That's the highest level since July 2013.

In China, bullion of 99.99 per cent purity was 1 per cent higher at 291.86 yuan a gram (US$1,365.84 an ounce) on the Shanghai Gold Exchange.

Silver and platinum in London advanced.

Palladium lost 0.2 per cent, extending its first weekly drop since June.

BLOOMBERG