Gold held near $4,186.89 an ounce on Friday, steadying after a rough week as traders awaited the September U.S. jobs report for clues on the Federal Reserve's next move. The metal remains on track for a second straight weekly decline even as Treasury yields ease from a multi-decade high. Markets are also pricing in sharply lower odds of another Fed rate increase this month.
Gold edged higher on Friday, with spot prices rising 0.2% to $4,186.89 an ounce by 05:27 ET as traders awaited U.S. jobs data for signals on the Federal Reserve's interest-rate path. Gold futures climbed 0.3% to $4,215.92 an ounce. The metal stayed on track for a second straight weekly decline after falling more than 2% so far this week.
Neil Welsh, Head of Metals at Britannia Global Markets, said: "Gold is steadying after a difficult week", pointing to easing Treasury yields and signs that the Fed is signaling patience on rates.
Treasury Yields Ease From a 2002-Era High
The U.S. 10-year Treasury yield briefly climbed to 5.344% on Thursday, its highest since 2002, before easing in afternoon trading. By Friday, the benchmark yield stood at 5.234%. Meanwhile, the U.S. dollar index inched down 0.2% but stayed near a 17-month high touched in the previous session. It was on track for roughly a 1% weekly rise, making gold more expensive for holders of other currencies.
Jobs Report Looms Over the Fed's Next Move
Markets are now focused on the September nonfarm payrolls report, due later Friday, with economists expecting nearly 90,000 jobs added, down from the prior month's gain. August payrolls rose by 162,000, while the unemployment rate is expected to hold at 4.1%. The Fed raised its benchmark rate by 25 basis points last month to 3.75%-4.00%, its first hike in three years, and indicated further increases could follow. However, cooler inflation readings have cut the odds of another hike this month, with markets pricing in about a 26% chance of an October increase, down from 69% a week earlier.
Inflation and Oil Pull Gold in Both Directions
Gold gained support earlier in the week after softer-than-expected U.S. inflation data reduced rate-hike bets. Traders are wary, though, that persistent energy-price gains and higher bond yields could keep inflation pressures elevated. Higher oil prices, driven by escalating Middle East tensions, have also pushed up global bond yields, reinforcing the competing pull between safe-haven demand and the higher opportunity cost of holding gold.
Source: Investing.com
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