LONDON: Gold edged lower on Friday as some investors took profits ahead of US payrolls data at 1230 GMT that will provide clues about the pace of US interest rate rises.
But demand for gold as a perceived safe investment remained strong due to tensions over North Korea and political turmoil in the United States, keeping prices near 9-1/2-month highs.
The US payroll numbers follow weak US inflation data on Thursday that reduced expectations of an interest-rate increase this year and pushed gold prices higher.
Gold is sensitive to interest rates because higher rates raise bond yields, making non-yielding bullion less attractive, and tend to boost the dollar, in which gold is priced.
Economists polled by Reuters expect a payrolls increase of 180,000 jobs in August.
Spot gold was down 0.3 per cent at $1,318.16 an ounce at 0958 GMT, still close to Tuesday’s peak of $1,325.94 — the highest since November 9 — and set for a weekly gain of 2.1 per cent.
US gold futures were up 0.1 per cent at $1,323.60.
Gold is likely to rise further after prices increased by 4.1 per cent in August, the biggest monthly gain since January, said Mitsubishi analyst Jonathan Butler.
“The technical uptrend is well established, there is continuing uncertainty over North Korea’s nuclear ambitions, and an imminent wrangle between Congress and the White House over the debt ceiling that must be solved by late September to avoid technical default,” he said.
Brinkmanship over debt negotiations could easily tip over into loss of market confidence in the US dollar, Butler said.
The dollar has weakened for six consecutive months, supporting gold by making it cheaper for holders of other currencies. The dollar, US bond yields and global stocks were slightly stronger on Friday.
Adding to geopolitical concerns, the United States on Thursday told Russia to close a consulate, worsening a diplomatic spat.
On the technical side, Fibonacci support for gold was at $1,297.50, said analysts at ScotiaMocatta. But gold had upward momentum and would likely rise through resistance at $1,326.20 towards $1,350, they said.
Butler said a continued push higher could see gold reach last year’s peak of $1,374.91.
“The breakout pattern now evident on the charts will likely gain further traction, drawing more quant-based funds in,” said INTL FCStone analyst Edward Meir.
Silver was down 0.4 per cent at $17.50 an ounce, but on track for a weekly gain of 2.7 per cent.
Platinum was 0.2 per cent lower at $992.99 an ounce and palladium was 0.3 per cent higher at $935.80.