Gold halts record rally, drops 1% as US jobs report looms

Gold prices slid 1% on Thursday as the US dollar firmed ahead of a key jobs report and investors took profits, after bullion recorded consecutive record peaks in the previous five sessions on the back of escalating trade tensions between the US and China.

Spot gold slipped 0.4% to USD 2,853.16 per ounce by 01:50 p.m. ET (1850 GMT) after hitting an all-time high of USD 2,882.16 on Wednesday. US gold futures settled 0.6% lower at USD 2,876.70.

“There’s probably a combination of a stronger dollar, some profit taking and yields moving a little bit higher off their lows,” weighing on gold ahead of the US employment report, said Daniel Pavilonis, senior market strategist at RJO Futures.

Nonfarm payrolls likely increased by 170,000 jobs after surging to 256,000 in December, a Reuters survey of economists showed. The unemployment rate is forecast unchanged at 4.1%.

A resilient labor market is fuelling economic growth and allowing the Federal Reserve to halt interest rate cuts as it evaluates the inflationary effects of Trump’s fiscal, trade and immigration policies.

“In addition to the volatility in general, we still have inflation in the background that’s starting to creep up, so gold is responding as a safe haven,” said Alex Ebkarian, chief operating officer at Allegiance Gold.

“Gold is on its way for USD 2,900, and you have very strong sentiment despite the fact that in the short term, the dollar gained strength.”

On a technical basis, gold’s Relative Strength Index (RSI) stands above 70, indicating that the metal is overbought.

Meanwhile, the stock of gold at the Bank of England has fallen by about 2% since the end of last year, its Deputy Governor Dave Ramsden said, citing strong demand for gold stored at the bank to take advantage of international price differentials.

In other metals, spot silver dropped 0.1% to USD 32.27 per ounce, and palladium fell 1.4% to USD 975.59. Platinum rose 0.7% to USD 985.98.

(Reporting by Anmol Choubey and Swati Verma in Bengaluru; Editing by Tasim Zahid, Vijay Kishore and Mohammed Safi Shamsi)