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PRECIOUS-Gold slips on stronger dollar ahead of U.S. jobs data
October 6, 2016 / 4:36 AM / a year ago

PRECIOUS-Gold slips on stronger dollar ahead of U.S. jobs data

* Spot gold to test support at $1,260 -technicals
    * Friday's U.S. payrolls report in focus
    * Silver, platinum off lowest in over three months

 (Adds comment, updates prices)
    By Swati Verma
    BENGALURU, Oct 6 (Reuters) - Gold prices slipped on Thursday
as the dollar firmed and equities rose ahead of economic data
that should bolster expectations of a U.S. interest rate hike.
    Spot gold had dropped 0.2 percent to $1,264.30 an
ounce by 0653 GMT. In the previous session, it touched its
lowest since June 24 at $1,261.59.
    U.S. gold futures fell 0.1 percent to $1,267.10 an
ounce.
    Friday's U.S. non-farm payrolls report is expected to show
175,000 jobs were added last month, according to the median
estimate of 100 economists polled by Reuters. Weekly jobless
claims data is also due, on Thursday. 
    "A surprise on the upside (of the labour numbers) will make
market watchers expect an even higher probability of a rate hike
and that could bring gold prices down," said OCBC Bank analyst
Barnabas Gan.
    "I would advise to buy on dips for gold simply because the
fall in gold prices is very much driven by very short-term
factors: like a higher probability of a Fed rate hike and higher
oil prices," Gan said, who has kept his year-end forecast of
$1,350 an ounce.
    Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets such as bullion,
while boosting the dollar, in which it is priced.
    The dollar index, which tracks the currency against a
basket of major peers, was up 0.2 percent at 96.267. 
    "The selloff in gold may not have ended yet," HSBC analyst
James Steel said in a note. 
    "$1,250 an ounce may be the next level gold can fall to,
especially if the market adjusts expectations higher regarding
the employment number to be released this Friday."
    U.S. services sector activity rebounded to an 11-month high
in September. 
    Traders priced in a near 65 percent chance of a rate hike in
December after the report. 
    Spot gold is expected to test support at $1,260 per ounce, a
break below which could cause a loss to $1,250, said Reuters
technical analyst Wang Tao. 
    Spot gold fell 3.3 percent on Tuesday, breaking well below
its key technical level of $1,300, its biggest one-day drop in
three years. The yellow metal has fallen to its lowest level
since Britain voted to leave the European Union in June.
    Among other precious metals, silver was down 0.1
percent at $17.68 an ounce. it touched a low of $17.51 on
Wednesday, its weakest since June.
    Platinum fell 0.4 percent to $971.99 an ounce, after
marking its lowest in more than three months in the previous
session.
    Palladium was down 0.3 percent at $674.22.   

 (Reporting by Swati Verma in Bengaluru; Editing by Christian
Schmollinger and Joseph Radford)

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