Gold holds above $1,400 an ounce as it heads for weekly gain of around 1.7%

London: Gold held above $1,400 an ounce on Friday, on track for their third straight weekly gain, as investors awaited US jobs data for clues on when the Federal Reserve would start tapering off its stimulus programme.

Monthly US nonfarm payrolls, due at 1230 GMT, will be scrutinised by investors for clues on when the Fed will begin possible tapering off its $85 billion (Dh312 billion) monthly bond purchases.

“I would not expect any big positioning ahead of the non-farm payrolls as most investors are just in wait-and-see mode,” Deutsche Bank precious metals trader Michael Blumenroth said.

“But there is room for disappointment if the numbers are not as high as the market expects [market consensus is around 170,000] and for that I think in the short term gold prices are more likely to test higher levels towards $1,425.”

Spot gold was down 0.2 per cent at $1,409.70 an ounce by 0944 GMT. US gold futures for August delivery fell 0.2 per cent at $1,412.90 an ounce.

US economic data has been in the spotlight since Federal Reserve Chairman Ben Bernanke said last month the central bank’s decision to taper off monetary stimulus would be taken “in the next few meetings” depending on whether the US housing and job markets showed continued strengthening.

But a top US central bank official said on Thursday investors may have over reacted recently to the possibility of the Fed winding down its monetary easing.

“The housing and labour markets are not very strong yet. The Fed has to keep in mind the impact on stock markets as well,” GoldSilver managing director Central Brian Lan said.

Slowing demand for gold

The dollar hovered near a 3-1/2 month low against a basket of currencies, while European shares failed to stage a rebound from sharp falls in the previous session that pushed them to six-week lows.

Gold is heading for a weekly gain of around 1.7 per cent, after recovering from a loss early in the week on fears of slowing demand in India.

India announced another increase in its import duty for gold earlier this week, in an attempt to curb gold imports to reduce its current account deficit.

On Friday, the Reserve Bank of India extended restrictions on loans against security of gold coins per customer to all co-operative banks.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.3 per cent to 1,007.74 tonnes on Thursday, as outflows resumed after holding steady for nearly a week. Holdings are at four-year lows.

Silver was unchanged at $22.59 an ounce, while palladium fell 0.4 per cent to $755.75 an ounce. Platinum rose to a two-month high at $1,537.75 an ounce, supported by continued supply disruptions in the world’s largest platinum supplier South Africa.