Gold rises first time in four days on uncertainty in Italy

[NEW YORK] Gold futures gained for the first time in four sessions amid signs of political uncertainty ahead of an Italian referendum this weekend.

Polls suggest Italian voters will reject a constitutional change to streamline the legislative process, a decision that could lead Prime Minister Matteo Renzi to resign, ushering in a period of political and market turmoil just as its fragile banks are struggling to win back the confidence of investors. In the US, where the Federal Reserve is watching for signs of strength in the labour market before raising rates, wages unexpectedly declined.

Gold has slumped 11 per cent in the second half of 2016, after posting its best first half in almost four decades, as investors price in increasing likelihood that borrowing costs will keep rising in the US. The precious metal, which doesn't offer yield, is finding some support from the uncertainty in Italy that's triggered a bid for haven assets.

"There are worries about Italian banks and what's going to happen with this referendum," Chris Gaffney, president of world markets at St Louis-based EverBank, said in a telephone interview. "We're seeing a little bit of buying in the gold market on uncertainty."

Gold futures for February delivery gained 0.7 per cent to settle at US$1,177.80 an ounce at 1:46pm on the Comex in New York, paring the weekly loss to 0.3 per cent. Prices are down for a fourth week, the longest streak in more than a year, as investors price in a 100 per cent chance that borrowing costs in the US will rise this month.

While wages declined, hiring in the US picked up in November and the unemployment rate tumbled to a nine-year low on a drop in the number of people in the workforce. On Thursday, investors cut their holdings in exchange-traded funds back by gold for a 15th day.

"Nothing in this data derails the FOMC's expectations of rate increase," Mr Gaffney said. "The markets are looking past December, trying to figure out what's going to go on next year."

In other precious metals: Palladium slipped, while platinum rallied on the New York Mercantile Exchange.

Silver gained 2 per cent on the Comex in New York.

BLOOMBERG