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Gold firms ahead of U.S. payrolls data; set for third weekly fall

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Gold prices hovered around the key $1,700

level on Friday ahead of a key U.S. labor data announcement,

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but the metal faces a third consecutive weekly loss on bets that

the Federal Reserve will retain its aggressive rate-hike stance.

Spot gold rose 0.3% to $1,701.50 per ounce by 0639

GMT, but was down 2% for the week so far.

U.S. gold futures were up 0.1% at $1,711.60.

The dollar index inched 0.1% lower but was not far

from 20-year peak scaled in the previous session.

A weaker-than-expected data could offer a temporary respite

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from gold selling, said Stephen Innes, managing partner at SPI

Asset Management.

However, “the market is still really playing on a

higher-for-longer U.S. interest rate narrative.”

U.S. non-farm payrolls data is due at 1230 GMT and is likely

to show 300,000 jobs were added in August and could signal

persistent labor market strength and cement expectations of a

75-basis-point rate hike this month.

Data on Thursday showed the number of Americans filing new

claims for unemployment benefits fell to a two-month low last

week, while layoffs dropped in August.

While U.S. manufacturing grew steadily last month, factory

activity in China, the euro zone and Britain fell fanning

concerns over a slowdown.

“Although China is struggling with COVID-19, there is no

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safe-haven demand… Safe-haven demand is going dollar’s way,”

said Jigar Trivedi, senior analyst currency and commodity

analyst at Mumbai-based Reliance Securities.

“Decline is seen in investment demand also… Holdings at

the SPDR Gold Trust was around 1,006 tonnes at the beginning of

August and is now at 973 tonnes.”

Even though gold is seen as a hedge against inflation and

economic uncertainties, higher interest rates increase the

opportunity cost of holding the bullion.

Spot silver rose 0.2% to $17.89 per ounce, platinum

gained 0.3% to $830.45 and palladium climbed 1.4%

to $2,040.72. They were also headed for a third consecutive

weekly fall.

(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi

Aich and Uttaresh.V)

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