After nearly a month of gains, gold is set to drop

Gold was headed for its first weekly loss in nearly a month on Friday as the safe-haven rally cooled, while traders largely kept to the sidelines ahead of the US nonfarm payrolls data due later in the day.

Spot gold ticked up 0.2% to $1,989.83/oz by 9.55am GMT, trading in a tight $6 range. US gold futures also rose 0.2% to $1,997.40/oz.

Gold is down nearly 1% for the week so far, moving away from the key $2,000 mark hit in October on escalating tensions in the Middle East.

“Gold prices have slipped back due to a reduction in the geopolitical risk premium as the markets get used to the idea of a long slog between Israel and Hamas,” said Michael Hewson, chief market analyst at CMC Markets.

“Money is coming out of gold and the dollar and moving back into risky assets.”

Stocks were headed for their biggest weekly rise in a year, while bonds rallied and the dollar was on the back foot as investors cheered a pause in US interest rate hikes.

Traders are now pricing in an 80% chance that the Federal Reserve will leave rates unchanged in December, according to the CME FedWatch tool.

Investors focus now shifts to US nonfarm payrolls data, due at 12.30pm GMT, which is expected to show that employers added 180,000 jobs in September.

The jobs report needs to deliver some surprisingly weak figures to weigh further on treasury yields and push gold prices above the $2,000/oz mark, City Index senior analyst Matt Simpson said.

Elsewhere, spot silver was down 0.5% at $22.63/oz and was on track for its second straight weekly loss.

Platinum rose 0.6% to $925.13, heading for its fourth consecutive weekly rise. Palladium climbed 1.1% to $1,111.62.

Reuters