Gold is heading for its first weekly decline in a month

Gold is poised to register its first weekly decline in a month on Friday, succumbing to the strengthening dollar fueled by diminishing expectations of an imminent interest rate cut in the United States. Investors are eagerly anticipating a pivotal employment report scheduled for later in the day, hoping for additional insights into the trajectory of interest rates.

As of 0156 GMT, spot gold eked out a marginal 0.1 percent gain, reaching $2,054.10 per ounce. However, it has experienced a downward trend of approximately 0.8 percent since the week’s commencement, following three consecutive weeks of gains.

In tandem, US gold futures exhibited a 0.2 percent uptick, reaching $2,053.00 an ounce.

The dollar index is poised to achieve its most robust weekly performance since July 2023, augmenting the cost of the precious metal for holders of alternative currencies.

Reflecting the robustness of the US labor market, Thursday’s data revealed a more substantial than anticipated decrease in new claims for unemployment benefits and exceeded projections for private sector employment gains in December.

Minutes from the Federal Reserve’s meeting on December 12 and 13 indicate a prevailing sentiment among policymakers that inflation is effectively managed. However, there remains a notable degree of uncertainty regarding the prospects of a forthcoming rate cut.

Persistently low interest rates serve to diminish the opportunity cost of holding non-yielding assets like gold.

The CME Group’s Fed Watch tool reflects a decline in traders’ expectations for a rate reduction, with current market projections suggesting a 65 percent likelihood of a rate cut by March, down from 90 percent a week prior.

Market participants are eagerly awaiting the release of the US non-farm payrolls report later today, seeking additional indicators to guide their investment decisions.

Turning to other precious metals, silver experienced a 0.6 percent increase in spot transactions, reaching $23.13 per ounce, while platinum saw a modest 0.3 percent decline, settling at $953.61.

Palladium, on the other hand, rebounded with a 0.7 percent increase to $1,044.23 following an eight-session decline.