COMEX gold fell early Thursday as traders ignored a jump in weekly jobless claims and reined in long positions before Friday's employment report and an early market close for the US Labour Day holiday on Monday.
The market was not expected to weaken too much as the spectre of political extremism around the world kept gold in vogue as a safe haven and a rebound in oil prices revived interest in inflation hedges.
"Oil is strong again at $44.69 (a barrel). That might help the metal a little during these days to maintain these levels, until we get a new idea what to do," said a dealer at a precious metals refining company.
At 10:11 am EDT (1411 GMT), December gold was off $2 at $408.80, trading in a tight $411.20-$408 range.
Spot gold was quoted at $406.25/7.00, off from $408.20/9.00 at the close. London's early fix was $407.80.
The Labour Department said first-time claims for unemployment benefits rose 19,000 last week to 362,000, raising concerns that economic growth is still too weak to create a lot of jobs. But almost half of the jump was caused by Hurricane Charley, which devastated parts of central Florida last month.
Volumes were light ahead of Friday's 8:30 am release of August non-farm payrolls, which are expected to have risen 160,000. July's unimpressive gain of 32,000 jobs raised concern of prolonged economic sluggishness, even as the Federal Reserve embarks on a tightening policy.
The unemployment rate is seen staying at 5.5 percent.
COMEX trade will wrap up around noon Friday and the exchange will not reopen until Tuesday.
Some investors bought gold as portfolio insurance before this week's Republican National Convention. It hit a four-month high at $416.80 two weeks ago.
December silver was down 2 cents at $6.81 an ounce, trading from $6.855 to $6.795. Spot silver fetched $6.75/78, off from $6.76/79. The fix was at $6.76.
October platinum was $2.90 lower at $871 an ounce. Spot fetched at $871.00/876.00. December palladium was off 10 cents at $215 an ounce. Spot palladium fetched $211.00/215.00.
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