Gold steadies as stronger dollar, higher yields weigh; U.S. jobs data awaited

On Friday, gold prices remained relatively stable as investors awaited U.S. employment data to gauge the Federal Reserve's interest-rate trajectory. A stronger dollar and elevated Treasury yields diminished the allure of non-yielding bullion. Spot gold rose by 0.1% to $4,182.45 per ounce, while U.S. Gold Futures increased by 0.2% to $4,212.05. Despite this, the yellow metal was on track for a second consecutive weekly decline, slipping more than 2% so far this week.

The U.S. Dollar Index slipped by 0.2%, yet remained close to a 17-month peak hit in the preceding session, making gold more expensive for holders of other currencies. Meanwhile, the U.S. 10-year Treasury yield briefly surged to 5.344%, its peak since 2002, before settling around 5.25% on Friday.

Markets are fixated on the upcoming nonfarm payrolls report due later on Friday. Economists anticipate the U.S. to have added approximately 90,000 jobs, a drop from 162,000 in August, with the unemployment rate projected to remain at 4.1%. The Federal Reserve hiked its benchmark rate by 25 basis points last month to 3.75%-4.00%, its inaugural increase in three years, and suggested additional hikes could follow.

However, softer-than-anticipated U.S. inflation data has tempered expectations for another rate hike this month, with markets pricing around a 28% probability of an October increase, a significant decline from 69% a week ago. Earlier in the week, gold gained some support due to softer-than-expected U.S. inflation data, reducing rate-hike expectations.

Yet, traders remain cautious that persistent oil-price gains and higher bond yields could maintain inflation pressures, further complicating the outlook for gold.