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Gold little changed, US non-farm payroll data in focus

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[BENGALURU] Gold prices were steady on Friday as investors remained cautious after US Treasury yields hit multi-year peaks and on expectations that stronger monthly employment data could boost the Federal Reserve's case for a tighter monetary policy.

Investors are expected to scour the US government's September payroll report scheduled for release on Friday and look closely for signs of wage growth.

A Reuters survey showed economists on average expect a rise of 185,000 in September after a jump of 201,000 in August.

Spot gold inched down 0.1 per cent at US$1,198.41 an ounce at 0446 GMT. It gained 0.6 per cent for the week, and was on track to mark its biggest weekly gain in six.

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US gold futures were up 0.1 per cent at US$1,202.3 an ounce.

"A robust NFP (non-farm payroll) print coupled with signs of rising wage growth could fuel expectations over the Fed tightening policy faster than projected," said Lukman Otunuga, Research Analyst for FXTM.

"This is bad news for zero-yielding gold which losses attraction in a high-interest rate environment."

The Fed raised US rates last week and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market.

"Another US benchmark interest rate expected before the end of this year is underpinning current US dollar strength, which in turn is keeping the US dollar gold price subdued," said Ronan Manly, precious metals analyst at Singapore-based dealer BullionStar.

Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

The dollar stood tall on Friday against its major peers, including the yen and euro, as investors evaluated the impact of a two-day global government bond rout that has lifted US Treasury yields to seven-year highs.

"We haven't seen the sharp declines in gold like we have in the past, but definitely there is plain downward pressure (from higher Treasury yields)," said National Australia Bank economist John Sharma.

Spot gold may test a support at US$1,193 per ounce, a break below which could cause a loss to the next support at US$1,188, while a break above US$1,207 could lead to a gain into US$1,214-US$1,222 range, according to Reuters technical analyst Wang Tao.

Among other precious metals, spot silver was up 0.2 per cent to US$14.58. Palladium was 0.1 per cent lower at US$1,056.60, while platinum was down 0.1 per cent at US$821.24.

REUTERS