Gold hovers near 3-month peak after weak U.S. data

An Argor-Heraeus SA branded two hundred and fifty gram gold bar, center, sits in this arranged photograph at Solar Capital Gold Zrt. in Budapest, Hungary.
Akos Stiller | Bloomberg | Getty Images

Gold held firm near a three-month high on Monday after last week's miss on the U.S. jobs growth numbers weighed on the dollar and bolstered expectations that interest rates will remain low.

Spot gold rose 0.4% to $1,836.89 per ounce, after touching its highest since Feb. 11 at $1,845.06. U.S. gold futures settled 0.3% higher at $1,837.60.

"The disappointing U.S. job number ultimately catalyzed a round of algorithmic short-covering," said TD Securities commodity strategist Daniel Ghali.

Also supporting the precious metal was the return of discretionary capital flowing into gold alongside strong physical demand from China and India last month prior to Indian lockdowns, Ghali added.

U.S. nonfarm payrolls data on Friday showed jobs growth unexpectedly slowed in April, pushing the dollar to an over two-month trough, making gold less expensive for holders of other currencies.

The lower-than-expected job numbers upset investors' hopes of a roaring recovery in the world's largest economy and that the U.S. Federal Reserve might tighten policy earlier than expected.

The U.S. central bank has pledged to keep interest rates low until inflation and employment pick up. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

"What is missing from the recent rise in prices and would be required to revive the rally is the participation of safe-haven seekers," Julius Baer analyst Carsten Menke said in a note.

Elsewhere, palladium rose 1.5% to $2,971.39 per ounce after hitting an all-time high last week on supply shortfall worries.

UBS raised its end-June and end-September price forecasts for the metal, used mainly in emission-reducing auto catalysts for vehicles, to $3,100 per ounce.

The bank expects the palladium market to be under-supplied by about 1 million ounces this year.

Silver eased 0.2% to $27.39 per ounce, while platinum climbed 0.8% to $1,258.87 per ounce. Both metals earlier reached a more than two-month peak.