Gold shakes off strong U.S jobs growth, rides Fed wave to weekly gain

GOLD - NEW YORK. Gold prices were on pace to post a weekly gain of nearly 1% on Friday, as they shrugged off stronger-than-expected monthly jobs data, in a week that saw major central banks standing pat on interest rates.

Spot gold was up 0.3% at $1,797.30 per ounce by 9:48 a.m ET (1348 GMT), recovering from a 0.3% drop shortly after data showed U.S. jobs growth picked up in October.

U.S. gold futures gained 0.4% to $1,800.50.

The limited reaction shows that "despite the strong labor market report, it is not going to change what Federal Reserve Chair Jerome Powell signalled this week, and we're still in wait and see mode," said Edward Moya, senior market analyst at brokerage OANDA.

Extremely low interest rates to spur economic growth during the pandemic have pushed gold prices to new highs over the last two years, as an easy monetary policy cuts the opportunity cost of holding non-yielding assets.

Nervousness this morning is what led to the knee-jerk reaction, but as market participants understand it shouldn't derail the movement in gold, you'll see prices stabilize going forward, Moya added.

The Federal Reserve this week stuck to its view that inflation would prove "transitory" and would likely not require a fast rise in interest rates. Following that, the Bank of England surprised markets by keeping rates on hold.

The dovish tones struck by these two central banks helped gold shrug off early losses of the week and put it on track to end the week about 0.8% higher.

"Gold bulls seem to be drawing strength from the Fed's unhurried stance on raising interest rates," with subdued treasury yields complementing upside gains, said FXTM analyst Lukman Otunuga.

Elsewhere, spot silver rose 0.6% to $23.92 per ounce. Platinum rose 0.6% to $1,031.43 and palladium gained 1.7% to $2,034.70, with both set to rise this week.