Gold prices remain above $2,000 as nonfarm payrolls are scrutinised

Gold prices were little changed in Asian trade on Friday, remaining above important levels as traders awaited a potentially weaker nonfarm payrolls number from the United States, which comes just days before a Federal Reserve meeting. 

The yellow metal had soared to new highs at the start of the week, aided by a combination of rate cut bets and safe haven demand. 

However, it had dropped from record highs almost as quickly as it had reached them, as traders locked in profits amid some uncertainty about US monetary policy.

Spot gold was unchanged at $2,030.26 per ounce, while February gold futures were unchanged at $2,046.05 per ounce at 01:17 ET (06:17 GMT). On Monday, both instruments reached record highs above $2,100 per ounce before quickly retracing much of their gains.

Nonetheless, the yellow metal has now been trading at $2,000 per ounce for nearly three weeks, signalling growing optimism about gold's prospects in the coming months.

Markets are looking for a lower number on nonfarm payrolls. 

The focus was now fully on November nonfarm payrolls statistics, which was due later that day.

After a dip in job opportunities and private payrolls data indicated some unwinding in the sector, the figure is expected to reflect more cooling in the labour market.

Any further contraction in the labour market reduces the Federal Reserve's incentive to keep interest rates higher for an extended period of time, which supports gold.

While the central bank is widely expected to maintain interest rates steady when it meets next week, its view on monetary policy, particularly when it wants to begin cutting rates, remains hazy. 

Earlier this week, bets on the Fed cutting rates as soon as March 2024 were a crucial source of support for gold prices. However, traders reduced their bets because the Fed has mainly maintained its stance that rates will remain higher for a longer period of time. 

Nonetheless, the yellow metal may gain strength in the coming months, particularly if interest rates fall and global economic conditions worsen more.

A slew of recent economic indicators from the United States, Asia, and the eurozone suggested that growth will slow in 2024.