Gold near 2-1/2-month high on weaker dollar, Treasury yields

by Jonathan Adams

Spot gold was steady at $1,815.88 per ounce, bullion is up more than 2.5%, and U.S. gold futures were little changed at $1,816.40

Gold prices on Friday hovered near a 2-1/2-month high and were on track for their best week in five months, aided by a weaker dollar and a pullback in Treasury yields as investors await U.S. non-farm payrolls report due later in the day.

Spot gold was steady at $1,815.88 per ounce by 0246 GMT, after reaching its highest since Feb. 16 at $1,817.90 in the previous session. Bullion is up more than 2.5% so far this week.

U.S. gold futures were little changed at $1,816.40.

The weaker dollar and U.S. Treasury yields dropping below 1.6% has helped gold prices to go above $1,800, Brian Lan, managing director at dealer GoldSilver Central said.

The U.S. jobs data is very important point. If data comes out really good, we can see people being more positive on the economy and it might lead to Federal Reserve increasing the interest rates earlier than expected, which will impact gold, he said.

The dollar index fell to a one-week low against its rival, making gold less expensive for other currency holders, while benchmark U.S. 10-year Treasury yields hovered close to a two-week low.

Lower bond yields generally reduce the opportunity cost of holding non-interest bearing gold.

Market participants await U.S. monthly jobs report to gauge the Fed’s strategy on monetary support going forward. Economists expect 978,000 new U.S. jobs for April, according to a Reuters poll.

Data on Thursday showed weekly U.S. jobless claims fell to a 13-month low.

The economic outlook is brightening, but more improvements are needed before the Fed will start to scale back monetary support, Cleveland Fed Bank President Loretta Mester said.

Elsewhere, palladium gained 0.5% to $2,960.06 per ounce, after reaching an all-time high of $3,017.18 earlier this week.

Silver added 0.3% to $27.26 per ounce and was up more than 5% this week. Platinum was steady at $1,252.24.

This article is for information purposes only.
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