Gold gains as dollar weakens; US jobs data in focus

Gold rose on Tuesday, bolstered by a sluggish dollar, with investors now looking to US non-farm payrolls data which could be the key to the Federal Reserve's stimulus-taper decision.

Spot gold climbed 0.5 per cent to $1,818.46 per ounce by 0636 GMT, edging closer to the 3-1/2-week high hit on Monday. Prices were up 0.2 per cent for the month.

US gold futures rose 0.5 per cent to $1,820.40.

The dollar index slipped to a more than three-week low, extending declines after Fed chief Jerome Powell's dovish remarks at the Jackson Hole symposium last week, where he gave no clear signal on the central bank's tapering timeline.

Gold is seen as a hedge against inflation and currency debasement, which can be caused by the massive stimulus measures.

"Gold will inch higher over next couple of days... But once the report finally arrives, it could be a game changer depending on how strong or weak the non-farm numbers are," said OCBC Bank economist Howie Lee.

However "selling pressures will start to build once the tapering process officially kicks in."

The US non-farm payrolls report for August is due on Friday. The market is expecting an increase of 728,000 jobs, unemployment to fall to 5.2 per cent from 5.4 per cent, and average hourly earnings to rise 0.4 per cent month-on-month.

In his remarks, Powell had said that if job growth continues, the central bank could start to cut its asset purchases this year.

"In case of disappointing jobs numbers, gold could break above recent highs and then even $1,900 is possible," said Hareesh V, head of commodity research at Geojit Financial Services.

Silver rose 0.5 per cent to $24.17 per ounce but was headed for third straight month of declines, falling 5.3 per cent.

Platinum gained 0.5 per cent to $1,012.01. It was on track for fourth consecutive monthly loss, sliding 3.7 per cent.

Palladium rose 0.1 per cent to $2,496.28, but was headed for its worst monthly performance in seven months, down 6.4 per cent.