Gold hovers at two-week low

SINGAPORE. — Gold held near a two-week low on Friday and was headed for its second week of losses on growing expectation that the US Federal Reserve will wind down its commodities-friendly bond-buying programme. The Fed’s stimulus has been a key driver in gold’s rally in recent years as it burnished its appeal against inflation.

Bullion’s 18 percent drop so far this year has been blamed on worries the central bank would soon taper the asset purchases.
Gold rose US$4,10 an ounce to US$1 371,09 by 3.14am GMT on short-covering and purchases by the physical sector.

It was not far off Thursday’s low of US$1 364,91, its weakest since August 22, and was on course to lose 1,7 percent for the week.
“There’s a small amount of buying because prices have been trading at the lower end these few days,” Lee Cheong Gold Dealers chief dealer Ronald Leung said in Hong Kong.

“People are covering their shorts before the non-farm payroll data come in. Tonight’s data may show the US economy continuing to improve, then maybe QE (quantitative easing) will be ended or reduced a little bit.”

US gold was at US$1 371,60 per ounce, down US$1,40. Investors are waiting for the release of Friday’s US non-farm payrolls data for August, which will help guide the Fed’s decision on when to slow its bond purchases.

Economists in a Reuters survey forecast 180 000 jobs were created in August compared with 162 000 jobs created in July.
“The bigger risk for gold would be a softer than expected figure of about 160 000, which is likely to trigger a relief rally,” ANZ said in a report.

“Near-term downside support rests around US$1 352,53 an ounce, coinciding with the mid-August lows and the 50 percent retracement from August 7 to August 28.

“Topside resistance is at US$1 372/oz, where the market is nudging now, and then the US$1 390/oz area,” ANZ said.
Gold rallied to about US$1 433, its highest in more than three months, in late August on safe-having buying as the US and its allies looked close to launching military strikes on Syria.

But the metal has shrugged off geopolitical tensions and turned its focus on the state of the US economy.
The dollar held firm near a seven-week high against a basket of currencies on Friday after solid US economic data sharpened expectations the upcoming crucial jobs report might make a reduction in the Fed’s stimulus a done deal. — Reuters.