The price of gold remained stable on Friday and was on track to achieve its first weekly increase in three weeks. Traders increased their bets that the U.S. Federal Reserve will cut interest rates soon, sending the dollar and Treasury yields lower.
Spot gold was little changed at $2,377.13 an ounce at 0321 GMT. Bullion has gained around 2% since the start of the 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 to 4.275% on Thursday, its lowest level since April 1, making bullion more attractive to investors.
“Gold prices have held up recently as falling bond yields and a weak US dollar have created a favorable 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 employment growth will be lower than economists’ median forecast of 185,000.
“It may take a significant downward surprise in labor conditions to convince the Fed of an early rate cut, given that inflation growth has broadly stalled around the 3 level “Any weaker labor market data could result in higher gold prices,” Jun Rong said.
A series of weaker macroeconomic data this week reinforced signs that inflation was slowing and that the Fed would begin cutting rates as early as September.
Lower interest rates reduce the opportunity cost of holding bullion without yield.
The price of gold is expected to hit a new record this year despite a decline in physical demand, according to consulting firm Metals Focus.
A cocktail of factors, such as forecasts of U.S. rate cuts, central bank buying and geopolitical tensions, supported demand for gold, which hit a record 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 .
