Gold gains as dollar retreats, US jobs report signals slow recovery

[BENGALURU] Gold rebounded above the US$1,800 psychological level on Friday, helped by a retreat in the US dollar and data showing slower-than-expected growth in US employment underpinning the need for additional financial support.

Spot gold climbed 1 per cent to US$1,810.26 per ounce by 1.58pm EST (1858 GMT), after falling to its lowest since Dec 1 on Thursday. US gold futures settled up 1.2 per cent at US$1,813.

"Gold continues to primarily take its lead from the dollar and we expect this to remain the case in the coming sessions," said Suki Cooper, analyst at Standard Chartered.

"Beyond the near term, we believe the outlook remains constructive for gold given the fiscal stimulus is likely to result in large US twin deficits."

Making gold cheaper for holders of other currencies, the US dollar retreated 0.6 per cent.

US employment growth rebounded moderately in January and job losses in the prior month were deeper than initially thought.

The US House of Representatives on Friday approved a budget measure that would let Democrats push the US$1.9 trillion Covid-19 relief package through Congress.

Gold is considered a hedge against inflation and currency debasement likely spurred by widespread stimulus.

For the week, however, gold is down 1.9 per cent, its biggest decline since the week ended Jan 8, in part due to higher US Treasury yields, because they increase the opportunity cost of holding non-yielding bullion.

As investors shift their focus toward the US economic outlook and eye riskier assets, gold may weaken in the short term, said Lukman Otunuga, senior research analyst at FXTM.

Spot silver gained 2.2 per cent to US$26.87 per ounce, but was down about 0.4 per cent for the week. Prices have shed more than 10 per cent since scaling a multi-year peak of US$30.03 on Monday, propelled by a GameStop-style retail frenzy.

Palladium gained 2.1 per cent to US$2,330.04, and was headed for its best week since November 2020.

Platinum rose 2.2 per cent to US$1,121.58 and was on track for the best week since December 2020.

REUTERS