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29 March 2024

Gold heads for biggest weekly gain since September

Published
By Reuters

Gold headed for its biggest weekly gain in a month as equities regained strength after fresh efforts by Europe to resolve its debt crisis eased nagging worries about a global recession, while purchases from jewellers offered additional support.

But trading was slow ahead of the release of US non-farm payrolls data for September, which could show 60,000 new jobs created and the unemployment rate unchanged at 9.1 per cent, offering hopes the world's largest economy was only growing slowly, and not falling into recession.

Gold added $7.44 to $1,656.79 an ounce by 0313 GMT, still down from a lifetime high of around $1,920 hit in early September.

"The payroll number will be a driver of trade today, but will jostle metals prices only if it's significantly far from expectations," said Tom Pawlicki, precious metals and energy analyst at MF Global.

"Technical factors have been slightly positive recently, in our opinion, but have been slow to create any upside. The bullish focus for the market today will rest on payrolls, recapitalisation of European banks, and on generally slow economic growth."

Global stocks rose after the European Union moved to shore up ailing banks as US President Barack Obama urged European leaders to act faster to tackle the sovereign debt crisis that threatened global economic recovery.

Fears about Europe's two-year-old sovereign debt crisis have caused a sharp sell-off in riskier assets since late July. Bullion jumped to record last month as the euro tumbled on worries the debt crisis would spread. But as equities plunged, investors sold the precious metal to cover losses, sending prices to a two-month low around $1,534 an ounce last week.

US gold futures were steady at $1,658.1 an ounce. Tokyo's Nikkei share average rose 0.9 per cent on Friday, while MSCI's broadest index of Asia Pacific shares outside Japan rose 1.2 per cent, led by a 2.4 per cent gain from the materials sector.

The euro also held gains on Friday after rallying for a third session overnight after the European Central Bank's moves to contain the euro zone crisis.

Jewellers across Asia remained active, buying gold whenever there was a slight dip in prices. Buying from consumers such as India, China, Indonesia and Vietnam kept premiums steady at their highest since at least February in Singapore and Hong Kong.

"People are cautious ahead of the payroll data, but physical demand is not too bad. It supports gold for the time being," said a dealer in Hong Kong. "The Asian region is still buying physical gold. People will jump to buy whenever there's a drop in prices."

Jewellers in main consumer India are building stocks ahead of the marriage season and Diwali, the Hindu festival of light later in October. Gold jewellery is an essential part of the dowry basket Indian parents give their daughters. In other markets, copper is headed for its first week of gains on Friday, snapping four weeks of declines.