Gold steady near 2010 low ahead of US jobs data

[LONDON] Gold steadied on Thursday as investors awaited US employment data that could bolster prospects of the Federal Reserve raising interest rates as early as next month.

US non-farm payrolls are due on Friday and economists polled by Reuters predict employment in July to increase at the same pace as June's 223,000 rise.

Spot gold was up 0.2 per cent at US$1,086.56 an ounce by 1404 GMT. The metal breached important technical support at US$1,100 after a deep rout in late July pushed it as low as US$1,077, its weakest since February 2010.

"The market is not able to go significantly higher, and with the dollar strength and positioning on the short side, there could be a break below support of US$1,080," MKS SA head of trading Afshin Nabavi said.

US gold for December delivery also rose 0.2 per cent to US$1,088.10 an ounce.

"The only supporting factor for gold is the fact that there is a big short in the market but it needs some piece of news to give gold a (boost)," Saxo Bank senior manager Ole Hansen said.

"In the medium term, with rising bond yields, EM (emerging markets) currencies collapsing, no safe haven demand and with the dollar potentially going higher on US rate expectations, there is no gold-friendly news out there."

A looming rise in US rates dims the appeal of non-interest yielding gold, instead pulling more funds towards the dollar, which steadied on Thursday after hitting its highest since April versus a basket of currencies in the previous session.

Data on Thursday showed the number of Americans filing new applications for unemployment benefits rose less than expected last week.

Expectations that the Fed could increase rates at its next policy meeting in September gained ground this week after Atlanta Federal Reserve President Dennis Lockhart said only a "significant deterioration" in the US economy would make him not support a rate rise next month.

But Fed Governor Jerome Powell said policymakers had not yet decided whether to raise rates next month, adding that more recent employment data had been mixed.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to 21.47 million ounces on Wednesday, the lowest since September 2008.

In other metals, spot palladium gained 1 per cent to US$596.72 an ounce, while platinum fell to US$943.24, close to a 6-1/2 year low hit earlier in the week. Silver was unchanged at US$14.56 an ounce.

REUTERS