Gold prices surge as three-day losing streak ends

Gold has turned higher after three straight sessions of losses, recovering from a sharp sell-off that pushed the precious metal down to $4,281 an ounce the previous day. By 7:56 a.m. Turkish time, spot gold had climbed back to $4,435.

Gram gold also paused its decline as the rise in the international price fed through to the Turkish market. It stood at 6,889 Turkish liras at the same time.

The recovery came as the dollar weakened and U.S. Treasury yields fell. A softer dollar makes gold, which trades in dollars, more attractive to investors using other currencies. Investors are now focused on the U.S. nonfarm payrolls report due the following day.

The ADP private-sector employment report pointed to moderate job growth in August. Investors are assessing whether a weaker-than-expected payrolls figure could reduce the likelihood of a Federal Reserve rate hike in September and provide further support for gold. Ilya Spivak, global macro head at Tastylive, called the employment report the week’s most important event.

Spivak said gold could begin another advance if it holds above $4,400, with $4,500 and then $4,700 emerging as potential targets. Markets are also awaiting the Fed’s Sept. 15-16 meeting. CME FedWatch data put the chance of a rate increase this month at about 62%. Higher rates raise the opportunity cost of holding gold because it does not pay interest, while fading rate-hike expectations can support prices. The Fed’s latest economic assessment described moderate growth in activity, employment and prices in recent weeks.

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The employment report will be the most important development of the week.