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Gold slips on firmer dollar; US jobs data eyed for cues

US Federal Reserve building in Washington, DC.

[SINGAPORE] Gold added to overnight losses on Thursday, hurt by a stronger dollar and as investors awaited a key US jobs report to gauge the timing of a Federal Reserve rate hike.

Spot gold had eased 0.1 per cent to US$1,132.30 an ounce by 0318 GMT, after dropping 0.5 per cent on Wednesday. US gold slipped about US$1 to US$1,132.40.

US private payrolls data on Wednesday suggested that labour market momentum likely remained strong enough for the Fed to consider an interest rate hike this year. The nonfarm payrolls report on Friday will be eyed for more clues.

"Gold is awaiting the payroll data for indications of Fed intentions at the September FOMC meeting. So the market may move sideways until the numbers are released," said HSBC analyst James Steel, referring to the Fed's Federal Open Market Committee.

The US central bank has pegged the likelihood of a rate increase to the strength of economic data. A strong jobs report could prompt the Fed to increase rates sooner than later.

Bullion traders remain wary of taking up fresh positions until they receive more clarity on whether the Fed will raise rates at its next meeting on Sept 16-17.

Low interest rates cut the opportunity cost of holding non-yielding bullion.

Also weighing on bullion was the absence of Chinese buyers. Markets in China, a major gold consumer, are closed on Thursday and Friday for public holidays.

Tepid Chinese demand during the holidays will also keep gold prices capped, along with the uncertainty over a US rate hike, HSBC's Steel said.

The dollar climbed against the euro and yen on Thursday as global investors tentatively stepped back into riskier equities, hurting bullion.

The technical picture for gold looks bearish with near-term support at US$1,117, ScotiaMocatta analysts said.

"We are bearish gold so long as it trades below the recent high of US$1,170," they said.

Other precious metals were also under pressure on Thursday. Palladium was down nearly 1 per cent at US$577.47 an ounce. Silver and platinum was lower by about 0.4 per cent.


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