Gold prices edge higher after U.S. payrolls data

Spot gold was up 0.3 percent at $1,187.52 an ounce on Friday

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Gold edged higher on Friday, snapping two days of losses, as revisions to U.S. payrolls data supported speculation that the Federal Reserve may hold off raising interest rates in the immediate future.

U.S. job growth rebounded last month and the unemployment rate dropped to a near seven-year low of 5.4 percent, potentially keeping the Federal Reserve on track to hike interest rates this year.

However, March payrolls were revised to show only 85,000 jobs created, the smallest number since June 2012.

Mixed economic data has pushed earlier expectations for the Federal Reserve to announce a rate rise at its June policy meeting back to later this year.

Spot gold was up 0.3 percent at $1,187.52 an ounce at 2:55 EDT (1855 GMT), while U.S. gold futures for June delivery settled up $6.70 an ounce at $1,188.90. As gold pays no interest, a potential rise in returns from U.S. bonds can weigh on its price.

“What our gangbuster jobs report said today is that short-term, it does not look like there will be an increase in interest rates,” said George Gero, precious metals strategist for RBC Capital Markets in New York.

Gero noted that the report prompted short-covering among investors who had piled on new shorts during the previous two sessions’ losses.

The dollar pared earlier gains against a basket of currencies after the data, and U.S. stocks rose on evidence of an uptick in the economy.

Gold prices have been stuck in a narrow range of around $50 an ounce since mid-March, as uncertainty over U.S. monetary policy pushed buyers to the sidelines. A failure to sustain a push above $1,200 an ounce last week is also weighing, traders said.

“The more we do not break upside resistance, the more the chance of a bid sell-off,” Afshin Nabavi, head of trading at MKS in Switzerland, said. “I think $1,100 should be tested sooner rather than later.”

Silver was up 0.7 percent at $16.43 an ounce, platinum up 0.8 percent at $1,137 an ounce and palladium up 2.5 percent at $796.75 an ounce. Earlier palladium hit its highest in two months at $801 an ounce.

South Africa’s National Union of Mineworkers (NUM) said on Friday it was shocked by platinum producer Lonmin’s plan to cut mining jobs and would fight the decision.

The company has said it is in talks with unions and employees to cut 3,500 jobs at its mines.

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