Stronger Dollar Saps Gold Rebound, NFP Data In Focus

Gold dropped for a second day Friday, hurt by a firmer dollar after the European Central Bank said it could cut interest rates further, ahead of U.S. jobs data that may add to signs the economy is improving, fueling speculation the Federal Reserve will scale back monetary stimulus.

The metal extended drop into the European session Friday as the dollar gained strongly against the euro and the British pound after the European Central Bank (ECB) and the Bank of England (BoE) on Thursday each indicated there were no plans to reduce monetary stimulus.

The dollar-denominated commodities tend to come under pressure when the greenback rises, as it makes them more expensive to holders of other currencies.

As of 2:27 ET, gold for immediate delivery lost 0.55 percent or 6.93 points to trade at $ 1,241.87 an ounce after opening at $1,249.43, having earlier hit a high of $1,250.47, and a low of $1,239.09.

The ECB President Mario Draghi said at a press conference Thursday that Eurozone interest rates would remain low or may even go lower for an extended period of time, assuring that the bank is nowhere near exiting the loose monetary policy.

The BoE also decided to hold both interest rate and asset purchases with the debut of the new Governor Mark Carney who released a statement. However, BoE’s language was more dovish than expected, increasing expectations that monetary policy will remain accommodative for some considerable time.

Other precious metals were as follows:

- Silver dropped 1.59% to trade around $ 19.25

- Platinum fell 0.59% to $ 1,331.85

- Palladium inched 0.72% down to $ 671.65

Investors on Friday will turn their attention to U.S. jobs figures for June. The nonfarm payrolls data will give investors a better idea of when the Federal Reserve will begin tapering its $85 billion monthly bond-buying stimulus.

The USDIX dollar index is currently trading around 84.13 after opening at 84.13, having so far hit a high of 84.14 and a low of 84.07.