Gold gains on tepid dollar; traders eye US nonfarm payrolls

Benchmark U.S. 10-year Treasury yields eased after recording their biggest one-day jump since Sept. 26 on Wednesday, while the dollar index ticked 0.1% lower.

Lower yields decrease the opportunity cost of holding gold, which pays no interest.

“A weaker-than-expected non-farm payrolls print would likely constrain the Fed’s pace of tightening,” said Thomas Westwater, an analyst with DailyFX.

“That would assuage market fears and clear the way for higher gold prices by sapping the dollar’s safe-haven strength.”

U.S. Labor Department’s more comprehensive watched nonfarm payrolls data due on Friday follows a strong ADP National Employment report released on Wednesday.

The ADP report showed private employment rose by 208,000 jobs last month, while separately the Institute for Supply Management’s non-manufacturing PMI reading came in slightly above expectations, suggesting underlying strength in the economy despite rising interest rates.

Upbeat data and hawkish comments from San Francisco Federal Reserve President Mary Daly on Wednesday cooled any hopes of a policy pivot.

“Gold needs to see a sharper slowdown in the U.S. and cooler prices for a bullish breakout to form,” Edward Moya, senior analyst with OANDA said in a note.

“Gold seems poised to consolidate between $1,680 and $1,740 until we get both the NFP report and latest inflation readings.”

Indicative of sentiment, holdings of the SPDR Gold Trust exchange-traded fund marked their third straight day of inflows on Wednesday.

Spot silver rose 0.1% to $20.72 per ounce, platinum was up 0.6% at $923.89 and palladium gained 0.6% to $2,260.61.