Gold gains as dollar, yields tick lower after jobs data

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Gold prices rose on Friday after a slightly weaker-than-expected U.S. jobs report pushed the dollar and Treasury yields lower, offering some respite to bullion which was still on track for its worst week in six.

Nonfarm payrolls increased by 187,000 jobs last month, the Labor Department said in its closely watched employment report. Economists polled by Reuters had forecast a gain of 200,000 jobs.

Spot gold was up 0.4% at $1,940.86 per ounce by 2:52 p.m. EDT (1852 GMT). Bullion, however, was down 0.9% so far this week.

U.S. gold futures settled 0.4% higher at $1,976.10.

”The jobs report has allowed the market to propose that the Federal Reserve is not as likely to raise interest rates. As a result, we’ve seen bond yields drop along with the dollar and that is certainly supporting the price of gold,” said David Meger, director of metals trading at High Ridge Futures.

Following the data, the dollar fell 0.5% against its rivals, making gold less expensive for other currency holders. Benchmark U.S. 10-year yields retreated from a nine-month high.

According to the CME’s FedWatch Tool, the probability that the Fed leaves rates unchanged at its September 19-20 meeting is now around 85% from around 78% just prior to the data coming out.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.

"The data was bit weaker-than-expected, but not dramatically so, which is why a small slight rise in prices this morning … Any dips (in gold) over the course of the next couple weeks, is likely going to be a buying opportunity," Meger said.

Elsewhere, spot silver gained 0.1% to $23.58 per ounce and platinum rose 0.6% to $919.36. Both were set for their third consecutive weekly loss.

Palladium eased 0.1% to $1,256.97 per ounce.