LONDON — Gold was steady on Friday, drawing little support from foreign exchange markets where the dollar was flat against a basket of currencies, with the market subdued ahead of key U.S. jobs data due later in the day.
Gold was at $998.30 (U.S.) an ounce at 0907 GMT, compared with $998.50 an ounce on Thursday.
If non-farm payrolls come in weaker than the expected 180,000 job losses, it could renew fears about recovery in the world's largest economy and bolster the U.S. dollar, seen as a safe haven.
Gold is often viewed as an alternative to holding the dollar and benefits from weakness in the U.S. currency, which makes it more affordable for those buying in other currencies.
“The market's primarily driven by the dollar,” said Ole Hansen, senior manager at Saxo Bank. “The non-farm payrolls will be an important gauge for the recovery that we've been seen for the past few months,” he said.
U.S. gold futures for December delivery were at $999.5 an ounce, versus Thursday's $1,000.7 on the COMEX division of the New York Mercantile Exchange.
After gold's 8.7 per cent rise in the three months to end-September, its strongest performance since the first quarter of 2008, it was unclear whether the precious metal would make a sustained rise to test the record high $1,030.80 per ounce set in March 2008.
“My feeling is any uptick at the moment is a sell opportunity because the market is still pretty long,” Mr. Hansen said.
The non-commercial net long position in gold futures on the COMEX division of the New York Mercantile Exchange stood at an all-time high of 236,749 lots for the week ended Sept. 22, figures from the Commodity Futures Trading Commission showed.
“We would look for gold to hold the $985-1,020 area but gold remains at risk to a deeper correction as falling risk appetite could spook some of the recently added fund longs,” said James Moore at Thebulliondesk.com in a research note.
Moreover, several traders said there was insufficient support for gold from the physical side.
“Supply and demand fundamentals are capping the gold price. Scrap is becoming more available and jewellery demand goes down every time the price goes up,” said Tony Parry, a gold analyst at Sydney-based Resource Capital Research.
Global recession and high prices this year have knocked down demand for gold in Turkey, one of the top consumers of bullion, which is now heading for the lowest ever recorded annual import levels.
He added: “The first quarter crisis-driven demand for gold-backed ETFs almost evaporated in the second quarter with an 88 per cent fall in funds flow into ETFs.”
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,095.327 tonnes on Oct. 1, unchanged from the previous business day.
Among other precious metals, silver was lower at $16.27 from $16.32. Platinum was at $1,270 from $1,277.5 and palladium was at $289 from $287.50.
