Gold attempts rebound, but heads for second weekly dip on rate-hike fears

Oct 6 (Reuters) – Gold prices edged higher on Friday, helped by a technical rebound after a nine-day losing streak, although robust U.S. jobs data raised worries over another U.S. rate hike and kept the bullion on track for its second weekly drop.

Spot gold was up 0.2% at $1,823.59 per ounce by 11:01 a.m. EDT (1501) GMT but was on track for its second straight week of decline, down 1.3% so far this week.

U.S. gold futures rose 0.3% to $1,837.50 per ounce.

Benchmark Treasury yields and the dollar index (.DXY) headed for weekly increases, denting appeal for gold.

Gold is seeing technical support after “a colossal week for bears,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, referring also to gold’s losing streak.

Spot gold faces resistance at $1,850 per ounce, but if it breaches that price, gold could run up to $1,900, Streible said.

Gold prices fell as much as 0.5% earlier in the session after strong jobs data. The U.S. Labor Department’s report showed non-farm payrolls increased by 336,000 jobs in September on a monthly basis, beating expectations of 170,000 additions, according to a Reuters poll of economists.

Traders are pricing in around a 34% chance of another rate hike from the Fed this year, according to the CME Fedwatch tool. Higher interest rates increase the opportunity cost of holding bullion.

With the recent rally in bond yields and the dollar, it is difficult to build a bullish case for gold, Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a note.

But “we maintain a patiently bullish view on gold with the timing for a fresh push to the upside being very dependent on U.S. economic data as we wait for the FOMC (Federal Open Market Committee) to turn its focus from rate hikes to cuts,” Hansen said.

Spot silver gained 2% to $21.31 an ounce, platinum rose 1.1% at $864.04 and palladium firmed 0.7% to $1,149.40. All were on track for weekly losses.

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