Gold rally fizzles out as dollar retains upper hand



*

Dollar jumps 0.8% against rivals

*

Gold to remain highly volatile ahead of U.S. jobs data - analyst

*

Silver down nearly 4%

(Updates prices)

By Brijesh Patel

Oct 5 (Reuters) - Gold fell more than 1% on Wednesday as the dollar regained traction and made bullion less appealing for other currency holders, while markets looked ahead to U.S. jobs numbers for clarity on the Federal Reserve's rate hike path.

Spot gold XAU= was down 1.2% at $1,705.59 per ounce by 1201 GMT, after hitting a three-week peak at $1,729.39 on Tuesday. U.S. gold futures GCv1 slipped 1% to $1,714.

The dollar index =USD jumped 0.8% against its rivals, after shedding 1.3% overnight to mark its biggest drop since March 2020. Benchmark U.S. 10-year Treasury yields US10YT=RR also rose.

"It's been a big start to the week in which gold has rallied very strongly on the back of weaker U.S. data, and then softer yields and the dollar," said Craig Erlam, senior market analyst at OANDA. "We're probably seeing some profit-taking on the back of that."

"There's plenty more to come, including the services PMI today and U.S. jobs report on Friday that should ensure (gold) remains highly volatile."

The ADP National Employment report is due at 1215 GMT on Wednesday, followed by the U.S. Labor Department's closely watched nonfarm payrolls (NFP) data on Friday.

"While gold investors will no doubt toast the recent upward move, it is driven more on rhetoric that the Fed may be less hawkish," Kinesis Money analyst Rupert Rowling wrote in a note.

"For the move to be sustained it will take a smaller hike by the Fed to ensure the gains are held onto."

Although gold is seen as a hedge against inflation, rate hikes tend to dull the appeal of bullion, which yields no interest.

Spot silver XAG= dropped nearly 4% to $20.27 per ounce, platinum XPT= fell 1.5% to $916.08 and palladium XPD= dipped 1.2% to $2,289.03.
Reporting by Brijesh Patel in Bengaluru; Editing by Jan Harvey, Alexandra Hudson

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.