06 March 2015
Gold Hovers Near $1,200, Set For Weekly Dip on Robust Dollar
(Reuters) - Gold held below $1,200 an ounce on Friday and was headed for a fifth weekly decline in six, with the dollar near 11-year highs on expectations of strong U.S. jobs data and an interest rate hike.
Spot gold was little changed at $1,198.81 an ounce by 0307 GMT, after falling for four straight sessions to Thursday. The metal is down about 1 percent for the week.
All eyes were on the U.S. nonfarm payrolls (NFP) report due later in the day to gauge the strength of the economy and how that will affect the timing of any interest rate hike by the Federal Reserve.
Analysts polled by Reuters expect U.S. payrolls to have increased 240,000 last month and the jobless rate to have ticked down to 5.6 percent from 5.7 percent.
"Strong NFPs may send gold falling sharply and swiftly, possibly to $1,180, followed by a slight dead cat bounce. Any number above 250,000 would likely have this effect," said Howie Lee, investment analyst at Phillip Futures.
But the metal could rally to $1,230 if the figure comes in below 230,000, Lee said.
Markets believe a strong report could prompt the Fed to soon increase U.S. interest rates, a move that could hurt demand for non-interest-bearing assets such as gold and further boost the dollar.
The dollar hovered at 11-year highs against a basket of major currencies early on Friday in anticipation of a strong report.
It was also helped by weakness in the euro, which stayed under pressure after the European Central Bank said it would kick off its 1-trillion euro bond-buying programme next week.
There seems to be a slight bias to the downside in gold prices at the moment, said James Gardiner, a trader at MKS Group.
"Gold is likely to trade either side of $1,200 in Asia today ahead of the NFP report. Asia has been a buyer at these levels, however if they are not on the bid you'd expect the $1,190 area to be tested later in the day," Gardiner said.
Prices on the Shanghai Gold Exchange suggested physical demand for gold in China, the second biggest bullion consumer, remained at healthy levels.
Chinese gold prices were about $4-$5 an ounce higher than the global benchmark.
Sustained interest for physical bullion typically puts a floor under prices.