Gold futures fell to the lowest levels of the session in North American trade on Thursday, as investors digested a pair of mostly upbeat U.S. employment reports.
Market players now looked ahead to Friday's U.S. nonfarm payrolls report. The consensus forecast is that the data will show jobs growth of 175,000 last month, following an increase of just 38,000 in May, the unemployment rate is forecast to inch up to 4.8% from 4.7%, while average hourly earnings are expected to rise 0.2% after gaining 0.2% a month earlier.
The metal will climb to $1,425 an ounce by the end of September, 4.4 percent higher than now, before dipping in the following six months amid prospects for higher U.S. interest rates, said Georgette Boele, a currency and commodity analyst at ABN Amro Bank NV.
"In the last few weeks we've seen a two-step move. First, we had the Brexit vote, which led to a rise in safe-haven demand, and then we saw markets starting to reprice monetary policy among central banks," Danske Bank analyst Jens Pedersen said.
"We had these two factors working in the same direction for gold."
Gold is highly sensitive to rising U.S. interest rates as they lift the opportunity cost of holding non-yielding assets such as bullion, while also typically boosting the dollar, in which the precious metal is priced.
"In the short term, I do see a risk that the dollar will rise further, so that will again cap the upside for gold," Pedersen said.
China, the world’s biggest producer and consumer of gold, added about 500,000 ounces to central bank reserves in June, restarting monthly purchases to diversify holdings after taking a breather in May.
The People’s Bank of China increased assets to 58.62 million ounces, or about 1,823 metric tons, from 58.14 million ounces in May when they were unchanged, according to data on the central bank’s website. The country has boosted its hoard in 11 out of the past 12 months after announcing a 57 percent increase to 53.32 million ounces since 2009.
Reference: CNBC, Bloomberg
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