Rising US Treasury yields have been one of the main hurdles for gold. Since October, the 10-year Treasury yield has risen from 3.599% to 4.631%, reflecting inflation concerns and strong economic performance. The dollar followed a similar trend, with the US dollar index reaching 108.541. When the dollar strengthens, prices in other currencies rise, making gold less attractive.
If the NFP report points to a softening labor market, yields could fall, easing some of the pressure on gold. Conversely, stronger employment growth could push yields higher, further reinforcing the current bearish sentiment towards gold. This relationship between the labor market, yields and the dollar will be crucial in shaping gold's performance in the coming weeks.
Political and geopolitical factors remain in play
Investors are also paying close attention to political developments. President-elect Donald Trump's proposed tariffs and economic policies are widely expected to contribute to inflationary pressures, which could support gold as an inflation hedge. Geopolitical tensions in Eastern Europe and the Middle East continue to increase the appeal of gold as a safe-haven asset.
Weekly outlook: Gold braces for volatility
Gold's performance next week will largely depend on economic indicators and bond market trends. If the NFP report shows an unexpected downside, gold could rise as yields fall. Conversely, positive labor data could push yields higher and put pressure on gold prices. While the broader outlook for gold remains positive, short-term price movements will depend on yields and the direction of the dollar.
Traders should continue to pay close attention to developments in the U.S. Treasury market and Fed policy updates, as they will be key drivers of gold prices heading into the next Fed meeting.
