Gold rises as dollar slips; focus on jobs data for Fed cues

Jan 4  – Gold prices rose on Thursday as the dollar edged lower, while investors looked out for more U.S. jobs data to gauge the Federal Reserve’s next steps on its monetary policy.

Spot gold was up 0.3% at USD 2,047.19 per ounce, as of 0659 GMT, after hitting its lowest since Dec. 21 on Wednesday. US gold futures rose 0.6% to USD 2,054.50 per ounce.

The dollar index ticked down by 0.1%, making gold more attractive for other currency holders.

“The fundamental thing to reasonably support gold is the US economy that is likely to slow down this year and rate cuts that are likely to arrive,” said Kyle Rodda, a financial market analyst at Capital.com.

However, waning expectations of early interest rate cuts this year are putting downward pressure on gold prices and it would be the case over the next few days as well, said Rodda.

Futures markets see a 72% chance that the Fed could begin cutting rates in March, compared with a 90% chance a week ago, according to CME’s FedWatch Tool.

Minutes of the Fed’s Dec. 12-13 meeting released on Wednesday showed officials were convinced inflation was coming under control but also noted an elevated degree of uncertainty about the rate cut outlook.

Lower rates decrease the opportunity cost of holding non-yielding bullion.

US manufacturing contracted further in December, though the pace of decline slowed, while job openings fell for a third straight month in November, pointing to easing labour market conditions.

Investors now await the weekly jobless claims data due at 1330 GMT and the non-farm payrolls report on Friday for further clarity on how much room the Fed has to lower rates.

Spot silver rose 0.2% to USD 23.01 per ounce, while platinum slipped 0.4% to USD 967.01. Palladium fell 0.1% to USD 1,065.30.

(Reporting by Harshit Verma in Bengaluru; Editing by Mrigank Dhaniwala and Rashmi Aich)