By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) — Gold futures pushed higher on Friday, lining up for a weekly gain of nearly 2% ahead of U.S. monthly jobs figures that could impact the outlook for further monetary stimulus by the U.S. Federal Reserve.
Gold for June delivery GCM3 +0.43% rose $6.80 to $1,474.40 an ounce in electronic trading on Globex. Gold prices are on track for a rise of about 1.8% for the week. They finished 4.2% higher in the prior week.
Gold on Thursday gained $21.40, or 1.5%, in the wake of fresh stimulus from the European Central Bank in the form of an interest rate cut. The ECB lowered its main refinancing rate by a quarter-percentage point to 0.5%, and reduced the interest rate on the marginal lending facility by 0.5 percentage point to 1%.
ECB President Mario Draghi said monetary policy would remain accommodative.
On Friday, the U.S. Labor Department is slated to release its employment report for April. The economy is expected to have created 135,000 jobs, up from an initially reported 88,000 jobs in March, according to a poll of analysts conducted by MarketWatch. The unemployment rate is projected to remain at 7.6%.
“A relatively supportive outcome is likely to mollify ‘spring swoon’ fears and boost risk appetite, cycle-sensitive crude oil and copper prices higher,” said Ilya Spivak, currency strategist at DailyFX Research, in a note.
But gold may not fare as well, he said. “In the FX space, the U.S. dollar is likely to find support as traders play up the Fed’s readiness to adjust the size of monthly asset purchases downward in line with improving economic developments, creating de-facto downward pressure on gold and silver amid ebbing anti-fiat demand,” said Spivak.
The report will arrive after the Federal Reserve’s widely expected decision this week to continue buying $85 billion a month in assets until there’s substantial improvement in the labor market. The Fed said it could accelerate or slow asset purchases, as the outlook for the labor market or inflation changes. Gold prices swung higher in electronic trading after the Fed’s announcement.
The flexibility of the Fed on its bond-buying program and the lack of a time frame for winding down the program was “read as slightly bullish” for precious metals and the raw commodity sector, Kitco.com senior analyst Jim Wyckoff wrote to clients Thursday.
Analysts have said more monetary stimulus could put pressure on the U.S. dollar DXY -0.23% , which in turn could help dollar-denominated gold prices.
“A bit bearish for the metals and other commodities was the Fed’s assertion Wednesday that inflation remains under wraps,” said Wyckoff.
Easy monetary policies can raise the risk of inflation, and gold is seen as an inflation hedge.
Before the widely watched U.S. jobs report, Automatic Data Processing Inc. on Wednesday said the U.S. private sector added 119,000 jobs in April, the smallest gain since September.
The ADP report was followed Thursday by Labor Department figures showing an unexpected fall in weekly initial jobless claims by 18,000, to a seasonally adjusted 324,000 — the lowest level since January 2008.
Gold prices have recently been recovering after a massive selloff in April.
Prices for other metals were higher Friday, with the July silver contract SIN3 +1.07% up 48 cents, or 2%, to $24.28 an ounce.
Copper for delivery in July HGN3 +4.37% gained 15 cents, or 4.7%, to $3.25 a pound.
July platinum PLN3 +0.69% rose $15.80, or 1%, to $1,516 an ounce, extending Thursday’s jump of 2.1%. June palladium PAM3 +0.53% moved up $5.95, or 1%, to $699.25 an ounce.
