Gold hovered above $1,200 an ounce on Thursday, clinging to gains from the prior session when it rose the most in two months, after weak US private jobs data suggested that a more comprehensive employment report could disappoint.

Indications that the US economy slowed significantly in the first quarter are boding well for safe-haven assets such as gold which is trading not far off a three-week high reached last week.

Employment report

US private employers added the smallest number of workers in more than a year in March, missing market expectations.

The ADP National Employment Report came ahead of Friday’s US nonfarm payrolls which is forecast to show an increase of 245,000 in March after rising 295,000 in February, according to a Reuters poll of economists.

Other data also pointed to slower US growth, with factory activity hitting a near two-year low in March.

Spot gold

Spot gold was flat at $1,203.55 an ounce by 0215 GMT, after climbing 1.8 per cent on Wednesday. That was bullion’s biggest single-day rally since January 30, nearly reversing a 2.4-per cent slide in all of March.

A weaker number on Friday could push back expectations for a US interest rate hike which some analysts had predicted to come as early as June.

But analysts say further gains in the gold price may be limited as investors pare back expectations for US non-farm payrolls after Thursday’s poor private jobs data.

“To the degree that disappointing data puts off Fed rate rises, weaker data can be seen as gold-bullish,’’ HSBC analyst James Steel said in a note.

“If the ADP data causes the financial markets to adjust lower expectations for the monthly non-farm payroll numbers, then gold may not receive a second boost if the non-farm job numbers are also disappointing.’’

Trading activity is also expected to be thin on Friday with many markets, including the United States, shut for the Easter holiday.

US gold for June delivery slipped 0.4 per cent to $1,203.60 an ounce.

Related Topics
comment COMMENT NOW