Weak Dollar Supports Gold Ahead of US Jobs Data

Gold prices rose on Friday, supported by a weak dollar, as investors awaited US jobs data to learn about the Federal Reserve’s plans to start reducing asset purchases.

Gold rose in spot transactions 0.2% to $ 1812.97 an ounce by 0641 GMT, and it fell 0.2% for the week.

US gold futures also rose 0.2% to $ 1814.80.

The dollar index is hovering near the bottom of a month, which enhances the attractiveness of gold to holders of other currencies. The US currency is heading for a decline for the second week in a row.

Ahead of the Labor Department’s report on US non-farm payrolls due at 1230 GMT, data revealed that the number of Americans filing for unemployment benefits for the first time fell last week, while layoffs fell to their lowest level in more than 24 years in August.

Powell said last week that if job growth continued, the central bank might start reducing its asset purchases this year, but would still be cautious in deciding whether to raise interest rates.

While gold is considered a hedge against inflation and currency instability caused by unprecedented stimulus measures, lower interest rates also reduce the opportunity cost of holding the non-yielding yellow metal.