Gold slips before US payrolls data, set for second weekly loss

Gold prices slipped on Friday, poised for a second weekly drop, as the US dollar strengthened and Treasury yields surged. Investors were eagerly awaiting key US payrolls data to gauge the Federal Reserve's policy direction. Spot gold slipped 0.6% to $4,154.78 per ounce by 0205 GMT, marking a loss of over 3% for the week. US gold futures also declined 0.4% to $4,184.00.

The US dollar appeared set for a weekly rise, making metals priced in greenbacks pricier for those holding other currencies. Meanwhile, US 10- and 30-year Treasury yields reached their highest levels since 2002. Analyst Kyle Rodda noted that market participants were closely watching US interest rate expectations and Middle East geopolitical developments.

"US nonfarm payroll data will be crucial for rate expectations," Rodda explained. "A strong report could heighten the likelihood of Fed rate hikes, further pressuring gold prices." Two Federal Reserve policymakers recently signaled a more definitive stance on waiting for additional data before deciding on another rate increase. On Wednesday, data revealed US inflation rose less than anticipated in August, with price pressures moderating more than initially reported.

Oil prices edged upward as traders weighed mixed supply signals. Currently, there is only about a 25% chance of a rate hike this month, down from about 70% earlier in the week, though a 79% probability of a rate increase in December still persists. Higher borrowing costs typically dampen gold's appeal, as it does not yield interest.

Silver fell 0.5% to $60.53, platinum slipped 0.4% to $1,716.93, while palladium increased 0.1% to $1,172.80, all indicating weekly losses.