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Gold Heads for First Weekly Drop in Four Weeks ahead of US Jobs Data

FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
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Gold Heads for First Weekly Drop in Four Weeks ahead of US Jobs Data

FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo

Gold was on track for its first weekly fall in four weeks after the dollar firmed, although prices held steady on Friday as markets looked ahead to key US jobs data to gauge the chance of a rate cut by the Federal Reserve as early as March.
Spot gold edged 0.1% higher to $2,030.32 per ounce by 0750 GMT. Bullion, however, has fallen nearly 2% for the week so far. US gold futures were steady at $2,047.10.
Bullion scaled an all-time peak of $2,135.40 on Monday on elevated bets for a rate cut by the Fed, before dropping more than $100 on uncertainty over the cut's timing, Reuters reported.
The dollar index was on track to snap a three-week losing streak, making greenback-priced gold more expensive for other currency holders.
Gold remains well-supported above $2,006 per ounce level, but stronger-than-expected payrolls data could put this support level in jeopardy, said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.
Data this week suggested that the US labor market was gradually losing momentum as higher borrowing costs curb demand in the broader economy.
The US non-farm payrolls report for November is due at 1330 GMT, which should show that employers added 180,000 jobs last month.
Markets are pricing in a 60% chance of a US rate cut as soon as March, CME's FedWatch Tool showed, but a Reuters poll saw rates unchanged until at least July.
Lower interest rates tend to support non-interest-bearing bullion.
"Outlook remains very bright for gold. Expect prices to remain in the range of $2,005 and on the upside it can test $2,080 in the near-term," said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.
Spot silver rose 0.1% to $23.81 per ounce, while platinum gained 0.9% to $915.19 and palladium inched 0.6% higher to $975.20 per ounce.

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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo

US job growth accelerated in September and the unemployment slipped to 4.1%, further reducing the need for the Federal Reserve to maintain large interest rate cuts at its remaining two meetings this year.
Nonfarm payrolls increased by 254,000 jobs last month after rising by an upwardly revised 159,000 in August, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast payrolls rising by 140,000 positions after advancing by a previously reported 142,000 in August.
The initial payrolls count for August has typically been revised higher over the past decade. Estimates for September's job gains ranged from 70,000 to 220,000.
The US labor market slowdown is being driven by tepid hiring against the backdrop of increased labor supply stemming mostly from a rise in immigration. Layoffs have remained low, which is underpinning the economy through solid consumer spending.
Average hourly earnings rose 0.4% after gaining 0.5% in August. Wages increased 4% year-on-year after climbing 3.9% in August.
The US unemployment rate dropped from 4.2% in August. It has jumped from 3.4% in April 2023, in part boosted by the 16-24 age cohort and rise in temporary layoffs during the annual automobile plant shutdowns in July.
The US Federal Reserve's policy setting committee kicked off its policy easing cycle with an unusually large half-percentage-point rate cut last month and Fed Chair Jerome Powell emphasized growing concerns over the health of the labor market.
While the labor market has taken a step back, annual benchmark revisions to national accounts data last week showed the economy in a much better shape than previously estimated, with upgrades to growth, income, savings and corporate profits.
This improved economic backdrop was acknowledged by Powell this week when he pushed back against investors' expectations for another half-percentage-point rate cut in November, saying “this is not a committee that feels like it is in a hurry to cut rates quickly.”
The Fed hiked rates by 525 basis points in 2022 and 2023, and delivered its first rate cut since 2020 last month. Its policy rate is currently set in the 4.75%-5.00% band.
Early on Friday, financial markets saw a roughly 71.5% chance of a quarter-point rate reduction in November, CME's FedWatch tool showed. The odds of a 50 basis points cut were around 28.5%.