Gold was little changed on Friday as investors stayed on the sidelines awaiting the confirmation of a strengthening U.S. labour market that could keep the Federal Reserve on track to start unwinding economic stimulus this year.
Spot gold rose 0.1% to $1,757.10 per ounce by 0905 GMT, while U.S. gold futures fell 0.2% to $1,756.00.
Gold is already pricing in tapering, and there is little inclination to take aggressive positions, especially with the non-farm payrolls report on the horizon at 1230 GMT, StoneX analyst Rhona O’Connell said.
Fed Chair Jerome Powell has said it would take one more “decent” jobs report to set the process in motion for a reduction in U.S. central bank’s $120 billion in monthly bond purchases.
If data overshoots to the upside, gold could face a knee-jerk downward reaction as bond yields would probably rise, but “a miss would be supportive for gold as the word ‘stagflation’ is increasingly appearing on the radar and gold benefits from risk-aversion.”
A Reuters survey predicted non-farm payrolls were likely to have risen by 500,000 jobs in September.
However, some analysts see gold’s outlook tilted to the downside, as the Fed may eventually hike interest rates regardless.
Investors also seemed to take little notice of a firmer U.S. dollar, which makes bullion expensive for overseas buyers, as well as higher U.S. Treasury yields.
Reduced stimulus and higher interest rates lift bond yields, translating into increased opportunity costs of holding bullion, which pays no interest.
While safe-haven gold will find some support from elevated inflation, geopolitical tensions and rising Delta coronavirus cases, factors including Fed tapering, easing pandemic restrictions and strong growth will cap prices, Fitch Solutions said in a note dated Oct. 7.
Spot silver fell 0.4% to $22.49 per ounce.
Platinum rose 1.1% to $990.41 per ounce and up 2% for the week.
Palladium advanced 1.9% to $1,997.47.