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Gold steady near 7-week highs ahead of U.S. jobs data

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LONDON (Reuters) – Gold steadied on Friday near a seven-week high as the dollar traded at near 15-month lows in the wake of weak U.S. data and political turmoil in Washington, though traders were mostly biding their time ahead of key U.S. jobs data due later.

Data late Thursday showed a much sharper than expected slowdown in growth in the U.S. services sector. Meanwhile, news broke that a grand jury will investigate allegations of Russian meddling in November’s U.S. election.

Markets are awaiting July’s U.S. employment report due later in the session for further clues on the state of the world’s largest economy and the implications for the Federal Reserve’s monetary policy.

Expectations of higher interest rates have receded in recent weeks, weighing heavily on the dollar and benefiting dollar-priced gold by making it cheaper for non-U.S. investors.

“Its the same trend we’ve seen for the last month. There’s no change. Its mainly a dollar story,” said Warren Patterson, analyst at ING.

The spot gold price was up 0.1 percent at $1,268.85 an ounce by 1042 GMT. It was on track to end the week up 1 percent, having gained 2.2 percent in July.

U.S. gold futures for December delivery climbed 0.1 percent to $1,275.60 per ounce.

U.S. payrolls data is expected to show an increase of 183,000 jobs last month after surging by 222,000 in June, a Reuters survey shows, though it would take a stronger than expected reading to turn the beleaguered dollar’s fortunes around.

“We expect gold to trade entirely on the nuances of the U.S. dollar ahead of the data,” said Jeffrey Halley, senior market analyst at OANDA.

U.S. 10-year bond yields were pinned near one-month lows as U.S. political turmoil has cooled expectations for growth and inflation. Falling yields reduce the opportunity cost of holding non-yielding bullion. [GVD/]

Spot gold may test support at $1,264 per ounce, a break below which could cause a further loss to the next support at $1,258, according to Reuters technical analyst, Wang Tao.

Silver rose 0.7 percent to $16.73 per ounce, after falling to a one-week low in the previous session.

Platinum climbed 0.7 percent to $966.80 per ounce while palladium dipped 0.1 percent to $883.95 per ounce.

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