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Gold prices dip lower in Asia ahead of U.S. jobs report

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Investing.com -

Investing.com - Gold ticked lower in Asia on Friday as investors await U.S. jobs data expected to set the tone for views on Federal Reserve policy in the coming months.

On the Comex division of the New York Mercantile Exchange, gold for April delivery eased 0.12% to $1,156.10 a troy ounce.

Silver for March delivery rose 0.24% to $14.890 a troy ounce, while copper for March delivery was flat at $2.121 a pound.

The Labor Department's Bureau of Labor Statistics is expected to report that nonfarm payrolls increased by 188,000 in January, falling sharply from December's robust gain of 292,000. It would mark the first month that the figure dipped under 200,000 since September. The unemployment rate, meanwhile, is expected to remain unchanged at 5.0%.

Overnight, gold surged to fresh 3-month highs amid a continuing slumping dollar, as investors prepared for a disappointing U.S. jobs report following the release of soft employment data on Thursday.

Last week, initial U.S. jobless claims rose 8,000 to 285,000 for the week ending on Jan. 30, slightly above consensus' estimates of 280,000. New claims continued to trend higher, as the four-week average increased to 284,750, up approximately by 5,000 from the same level a month ago. While continuing claims fell considerably to 2.255 million for the week ending on Jan. 23, the four-week average moved higher for the fourth consecutive week.

The downbeat data will likely temper analysts' optimism heading into Friday morning's U.S. jobs report for the month of January.

Most economists, though, are more concerned with the pace of wage growth amid a pattern of muted hourly earnings over the last year. A major uptick in earnings could bolster wage push inflation and help the Federal Reserve move closer to fulfilling both legs of its dual mandate.

Although Core PCE Inflation ticked up by 0.1 to 1.4% in January, it still remains considerably below the Fed's targeted objective of 2.0%. The Core PCE Index, which strips out volatile food and energy prices, is the Fed's preferred gauge for inflation.

Also on Thursday, the U.S. Census Bureau said factory orders nationwide declined at a rate higher than expected in December, falling for the fourth time in the last five months.

On a seasonally adjusted basis, U.S. factor orders fell by 2.9% last month, slightly below analysts' forecasts for a 2.8% reading. The soft data exacerbates widespread concerns related to the slowing of manufacturing activity in U.S. factories.

A dismal jobs report could persuade hawkish members of the Federal Reserve to act more cautiously in advocating swift policy normalization this year.

Earlier this week, Federal Reserve Bank of New York president William Dudley noted that the "tightening of financial conditions" since the Federal Open Market Committee began raising rates in December has become a "matter of considerable concern," to the U.S. central bank. There is now a 55.9% probability that the Fed will not raise rates in 2016, according to the CME Group's (O:O:CME) Fed Watch tool, up from 39.6% last month.

Any rate hikes by the FOMC this year are considered bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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