Gold Holds Above $1,290 On Waning Rate Hike Fears, Weak Equities

{{Gold found good support above $1,290 an ounce on Monday as surprisingly weak U.S. jobs data diminished fears that the Federal Reserve will raise interest rates soon, and as weaker stocks prompted some safe-haven bids.}}

Data on Friday showed U.S. jobs growth slowed in July and the unemployment rate unexpectedly rose, pointing to slack in the labour market. Nonfarm payrolls increased 209,000 last month, while economists had expected a 233,000 gain.

The data supports the Fed’s view that a sharp drop in the unemployment rate over the last year has masked substantial weakness in the labour market, signalling the need to keep interest rates at rock-bottom levels well into next year.

Spot gold was little changed at $1,294 an ounce by 0643 GMT, after gaining nearly 1 percent on Friday following the weak U.S. data.

“The surprising weakness in the jobs data on Friday lessens speculation that the Fed will increase rates soon as it shows that the labour market recovery is not going to be very smooth,” said one trader in Hong Kong.

“Gold could trade at between $1,280 and $1,320 in the near term supported by the dollar weakness and geopolitical tensions.”

The U.S. dollar suffered its biggest one-day fall in nearly a month on Friday after the weak data.

Global equity markets were pressured due to concerns over geopolitical tensions and Argentina’s debt default.

Gold, seen as an alternative investment to riskier assets such as equities, is seeing some safe-haven bids on escalating violence in the Middle East and Ukraine.

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