Gold prices gained on Friday, trading above weekly lows of US$2,615 and on track for a second consecutive weekly decline as traders await the U.S. nonfarm payrolls (NFP) data for directional cues.
By 3:20 pm AEDT (3:20 am GMT) was up by $10.53 or 0.4% to US$2,642.32 per ounce.
The U.S. dollar rebounded amid a souring risk environment, bolstered by persistent concerns over China's economic slowdown and mounting political tension in South Korea.
The main opposition party in South Korea has pushed forward an impeachment motion against President Yoon Suk Yeol, further destabilising investor sentiment. Reports of possible martial law declarations have added to market jitters.
Meanwhile, anticipation of the NFP data has led to cautious repositioning across markets. Economists project that the U.S. economy added 200,000 jobs in November, following a mere 12,000 in October, which was affected by hurricanes and the Boeing strike.
A lower-than-expected NFP figure could signal further cooling in the labour market, strengthening the case for additional Federal Reserve rate cuts after the anticipated reduction in December.
This scenario is likely to support gold prices, given the lower opportunity cost of holding the non-yielding asset.
Conversely, a robust NFP report could bolster speculation that the Fed might pause its rate-cutting cycle post-December, providing upward momentum for the U.S. dollar while pressuring gold.
The CME Group’s FedWatch Tool currently places a 71.8% probability on a December rate cut, down slightly from 75% earlier in the week.