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Gold faces longest weekly losing run since 1999

By Manolo Serapio Jr
August 07, 2015 13:51 IST
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Gold buyers in Asia were in no hurry, anticipating the market to weaken further, with premiums in India and Hong Kong picking up only modestly this week

In the global market, gold steadied near a 5-1/2-year low on Friday and was on track to show a loss for the seventh week in a row, its longest such slump since 1999, ahead of US data that may determine how soon the Federal Reserve raises interest rates.

A strong jobs number would fan speculation the Fed will raise rates next month, which is likely to pull non-interest-bearing gold to fresh lows.

"If we get a strong jobs number tonight, I suspect that the market will shift expectations further in favour of September rather than December," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Spot gold was up 0.3 per cent at $1,092.10 an ounce at 0647 GMT. The metal has been trading below $1,100 since breaching that support in a July 20 rout, sinking as far as $1,077 on July 24, its weakest since February 2010.

Bullion was down marginally on the week, with a seventh weekly loss in a row matching a similar losing streak in May-June 1999.

US gold for December delivery gained 0.1 per cent to $1,091.60 an ounce.

Economists polled by Reuters forecast the US economy added 223,000 jobs in July, the same outcome as June. US job growth has exceeded 200,000 in 14 of the last 16 months.

A slew of upbeat US economic data, including Thursday's positive weekly jobless claims, shows "there's not really much to stop the Fed from increasing rates", Spooner said, adding a slightly weaker nonfarm figure was unlikely to derail its plans.

The number of Americans filing new applications for unemployment benefits rose less than expected last week, suggesting labour market conditions are continuing to tighten.

"There's not a lot of natural reasons for investors to buy gold at the moment. The dollar is getting stronger and there's no real sign of inflation on the horizon with weaker oil prices and other commodities," Spooner said.

Gold's marking time ahead of the US employment report "may be the calm before the storm, with probability calling for another leg lower to the 2010 low of $1,044", according to technical analysts at ScotiaMocatta.

Gold buyers in Asia were in no hurry, anticipating the market to weaken further, with premiums in India and Hong Kong picking up only modestly this week.

Spot platinum and palladium remained near multi-year lows. Platinum was unchanged at $951 an ounce, down for a fifth week in a row, while palladium gained 0.6 per cent to $598.50 but was down for a second straight week.

Silver rose 1 per cent to $14.72 an ounce.

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Manolo Serapio Jr
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