Gold erased initial losses to rise above $1,000 on Friday, reflecting a spike and subsequent retreat in the dollar, as investors fretted over news of deeper than expected US job losses in September. US employers cut a heftier-than-expected 263,000 jobs, lifting the unemployment rate to 9.8 percent, according to a government report.
Gold slipped below $987 on the initial jobs news and then moved up to $1,006.20 an ounce at 1435 GMT, compared with $998.50 an ounce quoted late in New York on Thursday. Bullion rose to an 18-month high of $1,023.55 an ounce in September, in sight of the March 2008 record high of $1,030.80 an ounce. "It's dollar related and has tracked it very closely," said David Thurtell an analyst at Citigroup.
The non-commercial net long position in gold futures on the COMEX division of the New York Mercantile Exchange stood at an all-time high of 236,749 lots for the week ended September 22, figures from the Commodity Futures Trading Commission showed. US gold futures for December delivery were at $1,007.3 an ounce, versus Thursday's $1,000.7 on the COMEX division of the New York Mercantile Exchange.
"We would look for gold to hold the $985-1,020 area but gold remains at risk to a deeper correction as falling risk appetite could spook some of the recently added fund longs," James Moore at Thebulliondesk.com said in a research note. "Supply and demand fundamentals are capping the gold price.
Scrap is becoming more available and jewellery demand goes down every time the price goes up," said Tony Parry, a gold analyst at Sydney-based Resource Capital Research. The economic downturn and high prices this year have knocked down demand for gold in Turkey, one of the top consumers of bullion, which is now heading for the lowest ever recorded annual import levels.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,095.327 tonnes on October 1, unchanged from the previous business day. Among other precious metals, silver was higher at $16.39 from $16.32. Platinum was at $1,275.50 from $1,277.5 and palladium was at $292.50 from $287.50.