Gold holds steady ahead of crucial jobs data

Gold prices continued to hold firm on Friday morning as traders hold fire before the release of key nonfarm payrolls data. The precious metal, which has seen small swings throughout the week, remained relatively stable amid market uncertainties.

Despite a slight drop in the dollar and Treasury yields, gold’s gains were offset by traders shifting their focus towards higher-risk assets. The yellow metal has also seen some profit-taking after a notable 10% surge in October, driven by increased demand during the Israel-Hamas conflict. However, concerns about the conflict spilling over into the broader Middle East have eased due to international efforts towards a ceasefire.

As of 09:15 GMT, spot gold steadied around $1,989.72 per ounce.

Market participants now eagerly await the release of the October nonfarm payrolls data released at 12:30 GMT. The data release follows the Federal Reserve’s recent decision to maintain interest rate targets at 5.25%-5.5%, coupled with ambiguous signals about future rate hikes. This uncertainty prompted a surge in demand for risk-driven assets, as traders speculate on the possibility of rate cuts in mid-2024.

However, the outcome of the payrolls data remains pivotal. While the Fed has hinted at the potential for one more rate hike this year, the decision hinges on inflation trends and the labor market’s performance.

Analysts predict nonfarm payroll growth to have eased to 180,000 in October, down from 336,000 in September. Nevertheless, historical data shows that payrolls have exceeded expectations in six out of the nine months in 2023, indicating the resilience of the U.S. labor market. This crucial data release could influence the Federal Reserve’s monetary policy decisions, shaping the market sentiment in the upcoming days.