Gold edges down on strong dollar as investors eye US jobs report

By Eileen Soreng

(Reuters) - Gold edged down Friday, lingering near the key level of $1,800 an ounce, pressured by a stronger dollar as investors eyed a U.S. jobs report for cues on the Federal Reserve's future policy stance.

Spot gold fell 0.3% to $1,799.46 per ounce by 0517 GMT, set for its worst weekly performance since mid-June.

U.S. gold futures eased 0.4% to $1,802.50.

"If we get a combination of really solid payroll numbers coming on the back of a hawkish rhetoric by the Fed, I think it'll spook any interest rate sensitive markets like gold," said Stephen Innes, a managing partner at SPI Asset Management.

"That's why we're seeing risk reductions right now."

However, a complete meltdown in gold is highly unlikely and support of $1,790 should hold, he added.

Jitters around tapering set in after Fed Vice Chair Richard Clarida said conditions for a rate hike could be met in late 2022, and the central bank could start scaling back on its asset purchase program this year.

Fed Governor Christopher Waller also saw the possibility of reducing accommodative policy sooner than some expected, given the progress in economic recovery and improving labour market.

Higher interest rates raise the opportunity cost of holding non-interest bearing gold.

The dollar index was up 0.1%, making gold less appealing for holders of other currencies.

The U.S. non-farm payrolls report is due at 1230 GMT.

Indicative of sentiment, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to 1,027.61 tonnes on Thursday.

Silver was steady at $25.12 per ounce and was down about 1.4% for the week.

Platinum fell 0.4% to $1,001.66 and was on track for its biggest weekly fall since June.

Palladium rose 0.2% to $2,652.93.

 

(Reporting by Eileen Soreng in Bengaluru; Editing by Uttaresh.V and Rashmi Aich)