Gold rose modestly on Friday as weak U.S. jobs data sustained hopes for a Federal Reserve rate cut, but a strong dollar capped gains and put it on track for its first weekly decline in five weeks.
Spot gold was up 0.4% at $5,095.78 an ounce as of 9:02 a.m. ET (14:02 GMT), but has fallen 3.4% so far this week. US gold futures for April delivery rose 0.5% to $5,105.10.
Tai Wong, an independent metals trader, said: “Surprisingly weak jobs numbers, with strong private sector job losses along with rising wages, are hinting at stagflation. Let’s see if this is enough for gold to recover from a disappointing week.”
Nonfarm payrolls fell by 92,000 last month, compared with the 59,000 increase expected by economists, and the unemployment rate rose to 4.4%, the data showed.
On the geopolitical front, Israel attacked Beirut after ordering an unprecedented evacuation of the entire southern suburbs of the Lebanese capital. This is a major escalation in the war against Iran that began a week ago with the United States.
The U.S. dollar index posted its biggest weekly gain in more than a year as escalating conflict in the Middle East increased demand for safe-haven assets.
That has made dollar-priced gold more expensive for overseas buyers, leading to a decline in gold prices despite its reputation as a risk-averse destination.
“As part of this week’s poor performance in precious metals, some sellers have adjusted their algorithms to automatically sell when the dollar rises,” said Hugo Pascal, a precious metals trader at Improved.
Fed policymakers are widely expected to hold interest rates when they meet on March 18, and the first rate cut is widely expected to occur in July, according to the CME FedWatch tool.
Gold is often seen as a long-term inflation hedge, but because it does not generate income, it typically performs well in low interest rate environments. The yellow metal is up more than 18% so far this year.
Oil prices are headed for their sharpest weekly rise since Russia’s invasion of Ukraine in February 2022 as the Iran conflict escalates, reigniting inflation concerns.
Spot silver rose nearly 0.7% to $82.73 an ounce. Spot platinum fell 0.7% to $2,107.82 and palladium fell 0.3% to $1,625.25. All metals headed lower weekly.
(Reporting by Anmol Choubey in Bengaluru; Editing by Jean Harvey)
