Gold rises after biggest daily gain since August, with US payrolls in focus

Gold prices rose in early Asian trade on Thursday after posting their biggest daily gain since mid-August in the previous session, buoyed by a weaker US dollar, while investors awaited this week's non-farm payrolls report for clues on the Federal Reserve's policy outlook.

Fundamentals

Spot gold was up 0.6% at $4,082.76 per ounce by 0036 GMT, after climbing about 3.4% on Monday. US gold futures for December delivery gained 0.5% to $4,092.90.

The dollar retreated on Wednesday but was off its earlier lows after a sweeping victory by Democrats in the US midterm elections removed a source of uncertainty for the market while investors gauged the potential for regulatory changes.


A weaker dollar makes greenback-priced bullion more affordable for holders of other currencies. * US private payrolls growth increased further in October, the ADP National Employment Report showed on Wednesday.

Market participants now await the US nonfarm payrolls report on Friday to further gauge the Federal Reserve's monetary policy outlook.

On the geopolitical front, Washington's hostility towards Tehran will not change through partisan shifts or any concessions to the US, and those who believe otherwise are "greatly mistaken", Iran's Supreme Leader Mojtaba Khamenei said on Wednesday.

Traders currently see an 83% chance that the Fed will raise rates in December, according to CME's FedWatch tool.

Higher interest rates increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors.

Meanwhile, Citi has a 0-3 month price target of $4,500 per ounce for gold, it said on Wednesday, as it sees substantial upside potential if the Strait of Hormuz reopens and the Yemen/Saudi conflict de-escalates by the year-end, as it expects.

Euro zone inflation rose to a three-year high last month on surging food and energy costs and was set to rise further in the coming months, firming up the case for another European Central Bank rate hike in December.

The Bank of England is widely expected to raise interest rates for the first time in three years on Thursday due to mounting inflation pressures from the US-Iran war.

Among other metals, spot silver rose 0.3% to $52.37 per ounce, platinum gained 0.6% to $1,505.85 and palladium dropped 0.1% to $1,003.83.

Data/Events (Gmt)

0030 Japan S&P Global Comp Op Final SA, October

0030 Japan S&P Global SVC PMI Final SA, October

0700 Germany Industrial Orders MM, September

0700 Germany Manufacturing O/P cur Price SA, September

0700 Germany Consumer Goods SA, September

0930 UK S&P Global PMI: MSC Composite-Output, October

1200 UK BOE Bank Rate, November

1330 US Initial Jobless Clm 31st October, w/e