Gold dips as dollar climbs despite lackluster US payrolls data

[NEW YORK] Gold dipped in choppy trading on Friday as traders cashed in gains from the metal's rally to 3-1/2-month highs this week and as the dollar rose even after weaker-than-expected US payrolls data for December.

Spot gold was down 0.2 per cent at US$1,319.70 an ounce by 1.45pm EST (1845 GMT), off Thursday's high of US$1,325.86. It was still up 1.3 per cent from last week's close. US gold futures for February delivery settled up 70 cents, or 0.05 per cent, at US$1,322.30 per ounce.

The metal remained on track for a fourth straight weekly gain, something it has not done since April although it posted an annual increase of 13 per cent in 2017.

The US December non-farm payrolls report was weaker than expected. The dollar dipped briefly, then rose as investors reckoned the data would not deter US Federal Reserve from raising interest rates multiple times this year though at a gradual pace.

"The disappointing jobs report is giving gold a boost, but the hourly earnings being in line with expectations is holding it down a bit," said Ryan McKay, commodity strategist at TD Securities in Toronto.

Traders overall stuck to their conviction that the Federal Reserve will raise rates at least twice this year, a Reuters analysis of fed funds futures contracts traded at CME Group suggested.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Investment rotation between different asset classes, including digital currencies, may also be distracting investors from gold, said Phillip Streible, senior commodities strategist at RJO Futures in Chicago.

Among other precious metals, silver was down 0.1 per cent at US$17.22 an ounce earlier touching its highest point in more than six weeks at US$17.29, and 1.6 per cent higher for the week.

Platinum was up 0.8 per cent at US$967 an ounce, earlier hitting a 3-1/2 month peak at US$969.90, 4.6 per cent higher than last week.

Palladium was down 0.8 per cent at US$1,087.30 per ounce, also retreating after hitting a record high of US$1,105.70 on Thursday. It was 2.5 per cent higher on the week.

It was the best performer among major precious metals last year, rising 56 per cent on fears that rising demand for the autocatalyst metal would further tighten the market after years of deficit.

REUTERS