Gold prices held steady on Friday and headed for their first weekly gain in three, as traders ramped up bets that the U.S. Federal Reserve will soon start cutting rates, sending the dollar lower and Treasury yields.
Spot gold was little changed at $2,377.13 an ounce at 0321 GMT. The metal has gained about 2% this week.
U.S. gold futures rose 0.2% to $2,396.00.
The dollar remained near an eight-week low and the benchmark 10-year U.S. Treasury yield fell as low as 4.275% on Thursday, the lowest since April 1, making the metal more attractive to investors.
“Gold prices have held up lately, as falling bond yields and a struggling U.S. dollar have provided a supportive environment for the yellow metal,” said Yeap Jun Rong, market strategist at IG.
Markets now await US non-farm payrolls data at 1230 GMT, with the possibility that jobs growth will fall short of economists’ median forecast of 185,000.
“A significant downside surprise in labor conditions may be needed to convince the Fed to cut rates sooner than expected, given that inflation progress has largely stalled around the 3% level. Any weaker data on the labor market work could result in higher gold prices,” Jun Rong said.
A batch of weaker macro data this week added to signs of cooling inflation and the possibility that the Fed will begin cutting rates as early as September.
Lower interest rates reduce the opportunity cost of holding unprofitable bullion.
Gold prices are expected to hit another record this year despite a decline in physical demand, according to consultancy Metals Focus.
A cocktail of factors, from US rate cut expectations to central bank purchases to geopolitical tensions, supported demand for gold, which reached an all-time high of $2,449.89 on May 20.
Spot silver fell 0.4% to $31.16 an ounce, platinum rose 0.3% to $1,006.15 and palladium lost 0.4% to $925.75.
