Gold steady near five-week low ahead of United States jobs data

In another day of above average trading volumes, gold dropped through the psychologically important $1,200 an ounce level on Thursday as the metal comes under pressure from a strong United States dollar and a looming interest rate hike in the US.

Spot gold XAU= was down 0.5 percent at $1,209.49 an ounce by 2:59 p.m. EST (1959 GMT), after touching its lowest since February 1 at $1,206.05, putting it on track for its fifth straight session in the red.The most active USA gold GCcv1 futures for April delivery settled down 0.6 percent at $1,209.40.

Holdings of the largest gold-backed exchange-traded-fund ( ETF ), New York's SPDR Gold Trust GLD, remained unchanged on Tuesday from Monday.

Analysts note this is the strongest reading of this measure since October 2015, and put extensive pressure on the precious metal as it raised expectations for the big jobs report due on Friday. The last time a consecutive downward trend in the gold price occurred was in May, when there was a growing US dollar index and a rise in market confidence, according to the CBOE Volatility Index.

The dollar index, which pits the greenback against six major currencies, rose 0.1 percent to 102.14.

Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

Spot gold was barely changed at $1,207.38 per ounce at 0325 GMT after touching $1,205.50, the lowest since Feb.1, earlier in the session.

Analysts believe that the unexpectedly positive jobs data will have an impact on expectations for a Fed rate hike. Analysts note that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when US equities post gains. Analysts expect the employment data to influence the U.S. Department of Labor's monthly jobs report, which is set for release this Friday (March 10).

In other precious metals, silver edged down by 0.1 per cent to $17.47 per ounce, after touching $17.42 earlier in the session, matching the low last hit on February 6.

  • Zachary Reyes