Gold firms on subdued dollar as investors strap in for U.S. data

Reuters2021-08-04

Aug 4 (Reuters) - Gold prices ticked higher on Wednesday on a flat dollar, although gains were kept in check ahead of the U.S. jobs data which is seen as pivotal to the Federal Reserve's monetary policy strategy.

Spot gold rose 0.2% to $1,812.66 per ounce by 0834 GMT, while U.S. gold futures were up 0.2% to $1,817.50.

Gold has "very little direction" ahead of the jobs data and "if U.S. yields continue on their downward track, it's likely to head back towards the recent peaks at $1,835", CMC Markets UK's chief market analyst Michael Hewson said.

Hewson said a break above technical resistance at $1,835 could trigger a leg higher toward $1,870 for gold.

Buoying gold's appeal by making it cheaper for those holding other currencies, the dollar index was broadly flat.

"The boost for gold is likely driven in part by hedging as traders cover some of their exposure to stock markets," ActivTrades technical analyst Pierre Veyret said in a note.

Friday's closely watched U.S. non-farm payroll report could provide investors with clearer signals, following dovish commentary from Fed Chief Jerome Powell last week.

Economists in a Reuters poll forecast a 926,000 job increase in July's non-farm payroll numbers. The National Employment Report by payroll processor ADP is also due later on Wednesday.

Fed officials said on Tuesday the labour market would take time to heal from the effects of the pandemic.

Gold appears to be in a wait-and-see mode, said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA.

"Gold's price action remains consolidative but structurally positive and that points to further gains ahead. The converging 100- and 200-day moving averages suggest a breakout is coming and Friday's U.S. data will be a catalyst."

Elsewhere, silver gained 0.5% to $25.67 per ounce, palladium rose 0.2% to $2,654.18, and platinum fell 0.6% to $1,043.46.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Emelia Sithole-Matarise)

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