Gold futures on the COMEX division of the New York Mercantile Exchange rose on Friday, as the dollar came under pressure from a U.S. payrolls report that flagged up weak wage growth last month, weakening the case for near-term interest rate hikes.
The most active gold contract for March delivery rose 1.4 U.S. dollars, or 0.11 percent, to settle at 1,220.80 dollars per ounce.
As of Friday, traders were still in the process of adjusting their positions in the wake of the February Federal Open Market Committee (FOMC) meeting.Investors believe the Fed may raise rates from 0.75 to 1.00 during the May FOMC meeting at the earliest.
According to the CME Group's Fedwatch tool, the current implied probability of a hike from 0.50 to at least 0.75 is at 13 percent at the March meeting and 36 percent for the May meeting.
Gold's gains were capped by a stronger-than-expected U.S. jobs report which showed nonfarm payrolls increasing by 227,000 during the month of January.
Analysts note strength in construction and also strength in the labor force participation rate which rose by 0.2 percent to 62.9 percent.
"Markets seem to be looking at the soft wage data, which signal rather weak inflationary pressure, and therefore less need for the Fed to raise interest rates," Commerzbank analyst Carsten Fritsch said. The U.S. Dollar Index rose by 0.1 percent to 99.91 as of 1845 GMT.
The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors. Silver for March delivery rose 5 cents, or 0.29 percent, to close at 17.479 dollars per ounce. Platinum for April delivery added 7.1 dollars, or 0.71 percent, to close at 1,006.70 dollars per ounce.
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