Gold continued its upward momentum for a third day, hovering near a one-week high on Friday, driven by anticipation surrounding the crucial US Nonfarm Payrolls report. By 07:45 GMT, spot gold (XAU/USD) was trading at $2,519 and was on track for a weekly gain.

Expectations for a larger interest rate cut by the Federal Reserve in September have put downward pressure on the US dollar, which supported the non-yielding metal. The dollar hit a one-month low against the yen and a one-week low versus the euro, as mixed US job market indicators stirred caution ahead of the payrolls release.

The US Nonfarm Payrolls data, expected to show an increase of about 165,000 jobs in August, will play a pivotal role in shaping the Fed’s interest rate decisions. Traders are betting on further labor market weakness, which could prompt the Fed to pursue more aggressive rate cuts, boosting gold prices. Current odds for a 50-basis-point rate cut at the September 18 meeting stand at 41%, according to the CME Group’s FedWatch Tool.

Fed Chair Jerome Powell had previously signalled that the central bank’s focus was shifting from fighting inflation to preventing further deterioration in the labor market, suggesting an imminent start to monetary easing.

With gold prices up 22% so far this year, analysts suggest that any signs of labor market weakness in today’s NFP report could push the yellow metal higher, though traders may face bouts of volatility.


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