Gold prices were little changed on Friday as investors waited for key U.S. labor-market data that could influence the Federal Reserve’s next interest-rate decision.
A stronger U.S. dollar and elevated Treasury yields continued to limit demand for the non-yielding precious metal.
Gold Holds Near $4,180
Spot gold edged 0.1% higher to around $4,182 per ounce in early trading.
U.S. gold futures also rose modestly, gaining around 0.2% to approximately $4,212 per ounce.
Despite the small rebound, gold remained on track for its second consecutive weekly decline. The metal was down more than 2% for the week.
Strong Dollar Pressures Gold Prices
The U.S. Dollar Index slipped around 0.2% on Friday but remained close to a 17-month high reached in the previous session.
The index was still on course for a weekly gain of about 1%.
A stronger dollar generally makes gold more expensive for buyers using other currencies, which can reduce demand for the precious metal.
Treasury Yields Remain Elevated
Higher U.S. Treasury yields also continued to weigh on gold.
The benchmark 10-year Treasury yield briefly climbed to 5.344% on Thursday, its highest level since 2002.
It later eased back toward 5.25% on Friday.
Because gold does not pay interest, rising bond yields can make interest-bearing assets more attractive compared with bullion.
U.S. Nonfarm Payrolls in Focus
Investors are now turning their attention to the September U.S. nonfarm payrolls report.
Economists expect the U.S. economy to have added close to 90,000 jobs during the month, down from 162,000 in August.
The unemployment rate is expected to remain unchanged at 4.1%.
The labor-market report could provide important clues about whether the Federal Reserve will continue raising interest rates.
Federal Reserve Rate Outlook Remains Uncertain
The Federal Reserve raised its benchmark interest rate by 25 basis points last month to a range of 3.75% to 4.00%.
That marked the central bank’s first rate increase in three years.
Policymakers also indicated that additional increases could follow if inflation remains too high.
However, softer inflation data has reduced expectations for another rate hike in October.
Markets are currently pricing in roughly a 28% probability of an October increase, down sharply from around 69% one week earlier.
Softer Inflation Offers Gold Some Support
Gold received some support earlier in the week after weaker-than-expected U.S. inflation data reduced expectations for further monetary tightening.
Lower interest-rate expectations are generally supportive for gold because they reduce the opportunity cost of holding non-yielding assets.
However, investors remain cautious.
Persistent increases in oil prices and elevated bond yields could keep inflation pressures stronger than expected.
Middle East Tensions Add Safe-Haven Demand
Rising oil prices have been driven partly by escalating tensions in the Middle East.
The geopolitical uncertainty has provided some safe-haven demand for gold.
At the same time, higher energy prices can increase inflation expectations and push government bond yields higher.
This creates conflicting forces for gold, with geopolitical risk supporting prices while higher yields limit upside potential.
Silver, Platinum and Copper Move Higher
Other precious and industrial metals also advanced during Asian trading.
Silver prices rose around 0.4% to approximately $61.25 per ounce.
Platinum gained about 0.8% to roughly $1,741 per ounce.
Copper prices also moved higher.
Benchmark copper futures on the London Metal Exchange increased around 0.6% to approximately $14,353 per metric ton.
U.S. copper futures gained roughly 0.7% to around $5.59 per pound.
Gold Traders Await the Next Catalyst
The U.S. jobs report is now likely to determine the next major move in gold prices.
A stronger-than-expected labor report could increase expectations for additional Federal Reserve rate hikes, potentially supporting the dollar and Treasury yields while pressuring gold.
A weaker report, however, could reduce expectations for further tightening and provide fresh support for bullion.
