Gold heads for best week since January, US jobs data in focus
Gold prices firmed on Friday and were en route to their biggest weekly gain since January, helped by weaker oil prices, while investors awaited key U.S. nonfarm payrolls data for clues on the interest rate outlook.
Spot gold was up 0.4% at $4,254.11 per ounce, as of 0156 GMT after hitting a seven-week high in the previous session. Prices were up over 5% for the week.
U.S. gold futures gained 0.3% to $4,312.00.
Hopes of peace in the Middle East saw inflation expectations drop, allowing gold to surge higher from a multi-week consolidation above $4,000, said Matt Simpson, a senior analyst at StoneX.
U.S. President Donald Trump told reporters that he believed the war with Iran would be over soon and said the armed forces were experiencing issues with supplies of some weapons.
Crude oil prices were headed for a weekly loss. Lower energy prices help ease inflation concerns and reduce expectations of higher-for-longer interest rates. Gold is an inflation hedge, but elevated interest rates tend to weigh on its appeal as it offers no yield. [O/R]
Market participants braced for the U.S. Labor Department's nonfarm payrolls report for July, scheduled for release at 1230 GMT.
"Regardless of how NFP plays out, $4,000 has proven to be a solid support level - and I suspect bulls are waiting for dips to take advantage of a much-needed correction higher towards $4,600. NFP may provide some noise over the near term, but price action has spoken, and gold looks like it wants to rally," Simpson added.
Traders currently see a 55% chance of a U.S. rate hike in September, from 63% a week ago, per the CME FedWatch Tool.
Federal Reserve Bank of St. Louis President Alberto Musalem said he favoured a boost in short-term borrowing costs, noting that "earlier gradual incremental interest rate increases are preferable, less disruptive, less costly than potentially later, more abrupt interest rate changes."
Spot silver added 0.8% to $61.96 per ounce, platinum rose 0.4% to $1,735.71, while palladium dropped 0.3% to $1,367.06. All three metals headed for weekly gains.
