By Apeksha Nair
(Reuters) - Gold edged up in early trade on Friday as investors resorted to bargain hunting after the yellow metal dropped below its recent trading range to hit the lowest in more than four months overnight.
Spot gold was up 0.2 percent at $1,248.86 an ounce, by 0328 GMT, after hitting its lowest since July 26 at $1,243.71 in the previous session.
The metal was down for a third straight week, headed for its biggest weekly decline since early May.
U. S. gold futures were 0.2 percent lower at $1,250.70.
"Even as the dollar is firmer, there seems to be a bit of bargain hunting around. I do, however, think that the pressure is on the downside and rallies will still be sold," a Hong Kong-based trader said.
The dollar inched higher on Friday, as the passage of a bill to temporarily extend U. S. government funding raised investors' optimism that a tax reform bill would also pass. [FRX/]
The greenback took a brief knock earlier this week on concerns over a government shutdown, and as U. S.
President Donald Trump raised tensions in the Middle East after he recognised Jerusalem as the capital of Israel.
The Islamist group Hamas urged Palestinians on Thursday to abandon peace efforts and launch a new uprising against Israel in response to Trump's recognition of Jerusalem as its capital.
"Gold might have found some support in that but it seems to be just the dollar strength across the board now heading into the end of the year," the trader said.
The number of Americans filing for unemployment benefits unexpectedly fell last week, suggesting a rapid tightening of the labor market that bolsters expectations the Federal Reserve will raise benchmark interest rates next week.
Higher U. S. interest rates tend to boost the dollar, making greenback-denominated gold more expensive for holders in other currencies.
Markets will be eyeing the U. S. non-farm payrolls report due later in the day, which will be last employment report before the Fed meeting next week.
"Market-watchers are likely positioning for a FOMC rate hike next week. Overnight, the improvement in risk appetite considering the postponing of the U. S. partial government shutdown and further progress in Brexit talks should buoy market sentiment into the next week," said OCBC analyst Barnabas Gan.
Meanwhile, Asian shares on Friday rallied for a second session as investors awaited major economic data, and cryptocurrency bitcoin shot above $16,600 to its highest ever.
Spot gold may drop more to $1,239 per ounce, according to Reuters technicals analyst Wang Tao.
Silver rose 0.3 percent to $15.77 an ounce, after slipping to its lowest since mid-July on Thursday.
Platinum climbed 0.3 percent to $894 an ounce, while palladium was 0.1 percent lower at $1,012.25.
(Reporting by Apeksha Nair in Bengaluru; Editing by Biju Dwarakanath and Sherry Jacob-Phillips)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)