Bengaluru – Gold prices fell more than 1% on Friday, heading for a weekly decline as a stronger-than-expected U.S. jobs report dampened expectations of a Federal Reserve interest rate cut next month. The decline weighed on the non-yielding precious metal, highlighting the impact of macroeconomic indicators on gold’s performance.

Spot gold traded at $4,047.14 per ounce as of 0909 GMT, down 0.7% after earlier losing over 1% during the session. For the week, bullion has slipped approximately 0.5%. Meanwhile, U.S. gold futures for December delivery declined 0.4% to $4,044.50 per ounce.

U.S. Jobs Data Dampens Rate-Cut Hopes

“The prospect of further rate cuts has been somewhat diminished by decent labor market data that came out yesterday,” said Nitesh Shah, commodities strategist at WisdomTree. “That’s really the primary factor weighing on gold.”

Thursday’s delayed U.S. jobs report offered a mixed view of the labor market. Non-farm payrolls increased by 119,000 jobs, exceeding estimates of 50,000, while the unemployment rate reached a four-year high. These conflicting signals contributed to market uncertainty.

With the next jobs report due only after the Federal Reserve’s December meeting, traders now see just a 33% probability of a rate cut, down from 44% the previous week. As a non-yielding asset, gold typically benefits in low-interest-rate environments, which makes the Fed’s decisions a critical driver of short-term price movements.

Fed Cautions Against Further Rate Cuts

Cleveland Fed President Beth Hammack, who opposed the Fed’s most recent rate cut, cautioned against further reductions in borrowing costs due to inflation risks. This guidance further weighed on gold, as investors reassessed expectations for future monetary policy.

Physical Demand Weak Across Asia

Physical demand for gold remained weak across major Asian markets this week, as uncertainty over interest rates and market volatility deterred potential buyers. Despite this short-term pressure, analysts note that the fundamentals supporting gold remain solid.

Gold Fundamentals Remain Strong

According to ANZ, factors such as slowing global economic growth, high equity valuations, geopolitical uncertainty, and diversification away from U.S. assets are expected to sustain strong investment demand, including central bank buying.

Nitesh Shah of WisdomTree added, “I believe we are currently at the floor for gold prices. While prices may temporarily dip lower, the overall trend is likely to be upward over the coming months.”

Performance of Other Precious Metals

• Silver: Spot silver slipped 2.1% to $49.55 per ounce.
• Platinum: Rose 0.2% to $1,515.25 per ounce.
• Palladium: Dipped 0.2% to $1,375 per ounce.

The mixed performance of precious metals reflects broader market dynamics, including interest rate expectations, inflation concerns, and investor sentiment toward riskier assets.