Gold retreats as dollar perks up ahead of U.S. jobs data

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Gold prices fell on Wednesday as a firmer dollar dampened the appeal of greenback bullion to overseas buyers as investors waited for the US jobs report to gauge the Federal Reserve’s policy tightening stance.

Spot gold fell 0.4% to $1,719.30 an ounce (04:01 GMT). Precious metals prices hit their highest level since September 13 in the previous session at $1,729.39.

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US gold futures fell 0.1% to $1,728.30.

The dollar index rose 0.2% after the unit shed 1.3% overnight, marking its biggest drop since March 2020.

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Gold could break above the $1,735 resistance level on weak ADP payrolls data, City Index analyst Matt Simpson said, adding that markets are very sensitive to payrolls data right now.

The ADP National Employment Report, due at 1215 GMT, follows a government survey that showed US job vacancies fell the most in almost 2-1/2 years in August, indicating a cooling job market.

This is followed by the US Department of Labor’s closely watched NFP data, which is due to be released on Friday.

“In the event of a miss, traders are likely to see a weak NFP on Friday and that could weaken the dollar as traders are more excited about a Fed pivot and likely strengthen gold,” Simpson said.

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Federal Reserve officials recently reiterated their pledge to bring stubbornly high inflation under control.

Although gold has traditionally been viewed as a hedge against inflation, rising US interest rates have hurt the zero-interest precious metal’s appeal and boosted the dollar. Gold is down 6% year to date.

Holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.74 tons on Tuesday, marking the second straight day of inflows.

Spot silver slipped 1.6% to $20.78 an ounce, platinum fell 0.9% to $921.89 and palladium fell 0.7% to $2,299.24. (Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips)