Gold just had its strongest quarter in 30 years (GLD, GLX)

Investing.com

Investing.com -- Gold posted modest gains on Thursday ahead of a closely-watched U.S. employment report for the month of March, capping its strongest quarter in three decades.

On the Comex division, gold for June delivery traded between $1,225.60 and $1,242.10 an ounce, before settling at $1,234.00, up 5.40 or 0.44% on the day. Since opening the new year around $1,065, gold has surged more than $150 an ounce or 15%, as investors have sought shelter in the safe-haven asset amid a China-led global economic slowdown. As widespread financial and economic risks have mounted abroad, Federal Reserve chair Janet Yellen has sent strong indications that the U.S. central bank will remain cautious with the timing of its next interest rate hike, providing additional upside pressure to the precious metal.

With the significant gains over the last three months, gold completed its best quarterly performance since the third quarter of 1986.

Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,280.70, the high from Mar. 11.

On Friday, the second quarter will kick off with March's critical U.S. jobs report, which could provide key insight into the Federal Open Market Committee's (FOMC) decision-making process when it meets next in late-April. Earlier this week, Yellen noted that the U.S. economy has displayed remarkable resiliency as the labor market continues to exhibit dramatic improvements. Analysts expect monthly nonfarm payrolls to increase by 210,000 for the month, while the unemployment rate remains steady at 4.9%. In February, U.S. non-farm payrolls shot up by 240,000, pushing the three-month average above 225,000.

While the headline unemployment rate remained at eight-year lows last month, economists were also encouraged by a 0.2% decline in U-6 unemployment, a broader gauge of the employment situation nationwide. The U-6 rate, which measures the level of workers marginally attached to the labor markets and no longer actively looking for a job, stood at 9.7% in February. By comparison, the Fed's preferred gauge of U.S. unemployment, peaked at 18% in 2010 at the end of the Financial Crisis. Analysts will also keep a close eye on monthly wage gains after average hourly earnings slumped by 0.1% a month earlier.

Also on Thursday, Federal Reserve of Chicago president Charles Evans indicated that he could support a June interest rate hike with sufficient improvements in the economy, one day after strongly hinting that it could be premature to raise short-term rates in April. The FOMC has held its benchmark Federal Funds Rate steady at a level between 0.25 and 0.50% at its first two meetings of the new year. In December, the FOMC abandoned a seven-year zero interest rate policy by approving its first rate hike in nearly a decade.

Any rate hikes this year are viewed as bearish for gold which struggles to compete with high yield bearing assets in rising rate environments.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.30% to an intraday low of 94.30, hovering near five-month lows. With several hours left in Thursday's session, the index is on pace for its worst month in more than five years.

Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for May delivery gained 5.40 or 0.44% to 1,234.00 an ounce.

Copper for May delivery lost 0.006 or 0.27% to 2.184 a pound.

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