• Gold recovered on Friday from an early drop to five-week lows after a U.S. non-farm payrolls report for February failed to meet elevated expectations, prompting a drop in the dollar and Treasury yields.
Gold futures on the COMEX division of the New York Mercantile Exchange fell on Friday on a continued reaction to expectations for the U.S. Federal Reserve's rate hike.
Spot gold <XAU=> was up 0.1 percent at $1,202.36 an ounce by 2:56 p.m. EST (1956 GMT), after falling to $1,194.55, its weakest since Jan. 31. U.S. gold futures <GCv1> for April delivery settled down 0.2 percent at $1,201.40.
• The dollar index, which tracks the greenback against six major world currencies, fell to 101.470, its lowest level in nearly a week.
• Investors are primarily focused on the expectations for an increase in the Federal Reserve's rate hike. They now believe the Fed may raise rates from 0.75 to 1.00 during the March FOMC meeting.
• According to the CME Group's Fedwatch tool, the current implied probability of a hike from 0.50 to at least 0.75 is at 90 percent at the March meeting and 86 percent for the May meeting, along with a 8 percent chance of an increase to a 1.0 rate.
• Strong U.S. data also put pressure on the precious metal as a report released by the U.S. Department of Labor showed non-farm payrolls increased by 235,000 during the month of February, which was above expectations, and the unemployment rate fell to 4.7 percent. Analysts note that this was better than expected and will likely have an impact on thinking for the U.S. Fed's rate hike.
• "Whisper estimates for job growth were probably a bit higher after the strong ADP (private payrolls) number," Commerzbank analyst Carsten Fritsch told the Reuters Global Gold Forum.
"Jobs growth was stronger than expected, but wage growth remains subdued, so the last link to higher inflation is still missing."
• "All eyes are now on Wednesday's rate hike and what will happen when it actually comes to fruition," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York, adding that precious metals prices were holding ground. "Many expect this as a bullish signal but many traders are going to the sideline, preferring to be flat over the weekend."
Reference: Xinhua, Reuters
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