Gold struggles ahead of NFP data release

Commodities

Gold prices have staged a modest recovery after dropping to a one-and-a-half-week low during Friday’s Asian session, now hovering around the $2,640 level. The precious metal has found support as market participants speculate that the Federal Reserve may reduce borrowing costs during its upcoming December meeting. This sentiment has put pressure on the US Dollar (USD), which is trading near a multi-week low. Moreover, ongoing geopolitical tensions, particularly the prolonged Russia-Ukraine conflict and the volatility in the Middle East, continue to encourage demand for safe-haven assets like gold.

Despite the bounce, gold’s recovery lacks strong momentum, as investors seem hesitant to take decisive positions ahead of the release of the US Nonfarm Payrolls (NFP) report. This key data will shed light on the US labor market and play a pivotal role in determining the Federal Reserve’s future policy direction, which, in turn, will impact the USD and gold prices. For now, XAU/USD is on track to close the week in the red, potentially marking its second consecutive week of losses.

Oil Markets

Meanwhile, oil prices are under pressure, with West Texas Intermediate (WTI) crude hovering around $67.80 during Friday’s Asian session, marking the third consecutive day of declines. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, made significant announcements on Thursday, pushing back planned supply increases by three months and extending the full unwinding of production cuts until the end of 2026. This move suggests concerns within the cartel about potential oversupply and a slowdown in global demand, particularly from China, the world’s largest oil importer. These factors have combined to weigh heavily on the price of crude.

Currencies

Turning to the currency markets, the EUR/USD pair has come under pressure, trading around 1.0575 during the early European session on Friday. Rising concerns over potential US tariffs on European goods, coupled with growing expectations that the European Central Bank (ECB) will ease interest rates, have contributed to the Euro’s decline. As the market awaits the release of US jobs data, the focus remains on how it will influence the broader economic outlook and the trajectory of the USD.

In contrast, the Japanese Yen (JPY) is experiencing strength against the US Dollar during Friday’s Asian session. The Bank of Japan (BoJ) has taken a more hawkish stance recently, signaling its intention to pursue further interest rate hikes, unlike other major central banks, such as the Federal Reserve, which is expected to cut rates. This divergence in monetary policy, along with a shift in global risk sentiment and a decline in US Treasury bond yields, has provided support to the Yen, helping it gain ground against the USD.