Spot gold rose 0.09% to $4,180.82 an ounce in Friday trading, but remained on track for a second consecutive weekly loss as investors awaited U.S. jobs data for clues on the path of interest rates, amid pressure from a stronger dollar and higher Treasury yields.
U.S. gold futures for December delivery rose 0.28% to $4,214.26 an ounce.
Dollar and yields weigh on gold
The dollar index, which measures the U.S. currency against a basket of six major currencies, fell 0.21% to 101.89 points after rising in the previous session to its highest level in about 17 months. Nevertheless, the index remained on track for a third consecutive weekly gain.
The yield on 10-year U.S. Treasury notes stood at about 5.244% in the latest trading, after touching 5.344% on Thursday, its highest level since 2002. A stronger dollar makes gold more expensive for holders of other currencies, while higher yields increase the appeal of income-generating assets relative to the non-yielding metal.
Jobs data and the rate outlook
The U.S. nonfarm payrolls report for September is due on Friday, making the data especially important after two Federal Reserve policymakers said this week that they preferred to gather more information before deciding on another rate hike.
Kyle Rodda, chief financial market analyst at Capital.com, said investors were watching the outlook for U.S. interest rates and geopolitical developments in the Middle East. Strong jobs data could increase the likelihood of a rate hike, he said, potentially putting further pressure on gold prices.
Data released on Wednesday showed U.S. inflation rose less than expected in August, while the July reading for the personal consumption expenditures price index was revised lower. This helped reduce traders' bets on a rate hike at the next meeting, despite continuing inflation concerns linked to higher energy prices.
The probability of a rate hike in October fell to about 26%, from nearly 70% earlier in the week, while the likelihood of an increase in December remained at about 80%, keeping monetary policy a source of pressure on the precious metal.
Precious metals post limited gains
Spot silver rose 0.29% to $61.17 an ounce, platinum gained 0.38% to $1,733.86, and palladium rose 0.47% to $1,190.26.
Alongside the focus on economic data, markets monitored developments in the U.S.-Iran confrontation. Sources not identified in the report said Iran was preparing a broader and stronger response if the United States resumed large-scale military attacks against it, as diplomatic efforts continued, adding to market uncertainty.
