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Gold Heads for Best Week in Three Months Ahead of US Jobs Data

Gold prices rose on Friday, and were on course for their biggest weekly gain in three-months, as investors looked forward to the U.S. Non-farm Payrolls Data due later that day.

As of 0741 GMT, spot gold was up by 0.1%, at $3,548.09 an ounce. Bullion is up 2.9% this week.

U.S. Gold Futures for December Delivery rose by 0.1% to $3.608.90.

The U.S. unemployment claims increased more than expected in the last week. Meanwhile, ADP's National Employment Report revealed that private payrolls were below expectations for August. Both of these signals further evidence of a weakening labor market.

Investors now focus on the U.S. Non-farm Payrolls Report, due at noon GMT. According to a poll it is expected that 75,000 new jobs were created in August, compared to 73,000 in July.

Ole Hansen is the head of commodity strategy at Saxo Bank. He said that the short-term outlook for gold depends on the U.S. employment report, its impact on bond yields and rate cuts, as well as the dollar. A weak NFP will drive prices towards $3,650 while the support level between $3,450 and $3,500 will remain key.

Speaking earlier this week, several Federal Reserve officials cited labour market concerns to support the case for rate reductions.

The Fed is expected to deliver its first rate reduction of the year at the end of its two-day meeting beginning September 17, lowering interest rates 25 basis points.

Gold, which reached a record-high of $3,578.50 Wednesday, has no yield, but it performs well when interest rates are low.

Hansen stated that the combination of lower financing costs, Fed independence, geopolitical risk, a steepening curve, and a weaker US dollar, all point to further gains for precious metals.

If the current trend continues, spot silver will be up 0.3% at $40.81 an ounce, and it could reach its third consecutive weekly gain. Platinum rose 1% to $1381.33 while palladium gained 0.2%, reaching $1125.74.

(source: Reuters)