Gold rises over 1% as dollar retreats

LONDON: Gold rose more than one percent on Wednesday as the dollar retreated after a downbeat US jobs report raised expectations the Federal Reserve could be more cautious in tightening monetary policy.
The dollar fell 0.1 percent against a basket of currencies, after weaker-than-expected ADP private jobs data raised concerns that Friday's impending jobs report could also point to worsening conditions in the labour market.
"There is so much discord in the US data that is difficult to find what exactly the next report is going to be. It's the uncertainty that pushes people towards safe-haven assets such as gold," ING Bank senior strategist Hamza Khan said.
Spot gold rose 1.5 percent to a session high of $1,200.40 an ounce, and was trading up 1.3 percent at $1,199.67 at 1415 GMT. US gold futures for June delivery were up $17 an ounce at $1,200.20.
A strong reading from the US jobs data on Friday could boost bets the Federal Reserve will hike interest rates sooner rather than later, lifting the opportunity cost of holding non-yielding gold.
However, a worse-than-expected report could support views that the Fed will hold off any rate hike until next year.
Gold is particularly sensitive to shifts in US interest rates, which also move the dollar, in which the metal is priced.
"All the markets are watching the Fed deliberations," Societe Generale analyst Robin Bhar said. "Gold is going to find it difficult to weather the headwinds coming from tightening monetary policy."
Last week, Fed Chair Janet Yellen suggested a rate hike is still on the cards for later this year. Her remarks halted a seven-day rally in gold, its longest since 2012, that had been spurred by hopes the Fed would take it slow in raising rates. The metal ended March down more than 2 percent.
The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Trust, in March recorded its biggest monthly outflow since December 2013.
Buying interest in China, the world's second-largest gold consumer after India, has been relatively soft of late, but dealers reported some interest overnight after prices eased.
"Following yesterday's (Tuesday's) sell off, China was back as a buyer today," MKS said in a note. "We saw gold add a few dollars in Tokyo before Shanghai took over and sent the yellow metal to a session high."
Silver rose 1 percent to $16.78 an ounce, while platinum was up 0.7 percent at $1,147 an ounce and palladium climbed 1.2 percent to $740.98 an ounce.
Silver saw the biggest gain among the precious metals in the last quarter, rising 6 percent, while palladium fell 7.6 percent. Platinum fell just over 5 percent.