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Singapore - Gold headed for a second weekly advance as investors focus on a key jobs report in the US due Friday, following Thursday’s Bank of England (BoE) stimulus package that included its first interest-rate cut in seven years.
Bullion for immediate delivery rose 0.2% to $1 363.67 an ounce at 08:48, after a 0.2% gain on Thursday, according to Bloomberg generic pricing. The metal is up 0.9% this week.
The BOE’s stimulus, to contain the fallout from the UK decision to quit the European Union, is the latest measure from central banks and governments to support growth. Weak or negative interest rates have helped push gold 29 percent higher this year.
The payrolls data will be watched for clues on the timing for the next rate rise by the Federal Open Market Committee. After a report on July 29 showed second-quarter gross domestic product rose less than forecast, the focus will be on the strength of the labour market.
Subdued growth will force the Fed to keep rates steady in 2016, with a single hike seen in 2017, according to BMI Research, which raised its 2017 price outlook by $50 to $1 400.
“All eyes are on tonight’s US nonfarm payrolls data, but irrespective of the outcome I see little prospect of any potential near-term US rate rise,” said Gavin Wendt, director at MineLife Pty in Sydney. “This means a floor for gold prices and the potential for further near-term gains.”
Policy makers will hold off raising rates for at least a year, according to fed funds futures data compiled by Bloomberg, while the probability of a hike in December is about 37%, down from 45% two weeks ago.
Holdings in gold-backed exchange-traded funds added 5.5 metric tons to 2 031.2 tons on Thursday, data compiled by Bloomberg show. That’s the highest level since July 2013. In China, bullion of 99.99% purity was 1 percent higher at $1 365.84 an ounce on the Shanghai Gold Exchange. Silver and platinum in London advanced. Palladium lost 0.2%, extending its first weekly drop since June.
