Gold consolidated off a one-month peak ahead of U.S. labor market data on Friday, but safe-haven inflows triggered by tensions over Taiwan and lower U.S. yields kept bullion on course for a third straight weekly gain.
Spot gold fell 0.3% to $1,785.98 per ounce by 0934 GMT, after hitting its highest level since July 5. Prices were up 1.2% so far this week.
U.S. gold futures eased 0.2% to $1,803.30.
“Heightened geopolitical risk over the Taiwan Strait may be transient but has certainly captured the markets’ attention,” said StoneX analyst Rhona O’Connell, adding prices could be seeing some technical consolidation after recent sharp moves.
Economists expect U.S. nonfarm payrolls to have increased by 250,000 jobs last month.
While the Federal Reserve seems to be more focused on inflation, the level of employment will add some clarity about the U.S. economy’s momentum, O’Connell added.
Post the July policy tightening, Fed Chair Jerome Powell signaled further hikes will be data-dependent.
The yield on 10-year Treasury notes slipped, reducing the opportunity cost of holding non-interest bearing gold. However, the dollar crept higher, putting some pressure on bullion.
“A strong jobs report may be bad news for gold given how it will boost the odds of more aggressive hikes from the Fed… A disappointing report is seen weakening the dollar and reducing rate hike odds – offering gold some more room to fight back,” said Lukman Otunuga, an analyst at FXTM.
“Gold bulls could draw strength from recession fears, ongoing geopolitical risks in Europe, and tensions between the United States and China.”
Elsewhere, spot silver fell 0.5% to $20.04 per ounce, while platinum rose 0.9% to $934.44, en route to a weekly gain.
Palladium jumped 2% to $2,106.21, but was heading for a weekly fall. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Susan Fenton)