Gold prices lift 0.4%; US Nonfarm Payrolls ahead

Gold prices traded slightly higher during Friday’s Asian session as traders awaited the release of United States Nonfarm Payrolls (NFP) data for September, which could significantly influence market expectations for an October Federal Reserve (Fed) interest rate hike.

By 4:05 pm AEST (6:05 am GMT), spot gold prices were up 0.4% at US$4,195.56 an ounce.

The non-yielding bullion remains caught between energy-driven inflation risks that have pushed US Treasury yields to multi-year highs and declining expectations for another rate hike this month, alongside recent dovish commentary from two key Fed policymakers.

Markets are now pricing in just a 28.2% chance that the Fed will raise interest rates later this month, down sharply from about 70% at the start of the week, according to the CME Group FedWatch Tool.

The next clear directional move in gold will depend on the upcoming top-tier US NFP release. Markets expect headline payrolls to increase by around 90,000 in September, following a stronger-than-expected gain of 162,000 in August.