Gold steadied on Friday and was on track for its largest weekly gain since January, supported by declining oil prices, as investors anticipated crucial U.S. nonfarm payrolls data for insights into the interest rate outlook. Spot gold remained relatively stable at $4,235.57 per ounce as of 0045, reflecting a weekly increase of 4.8%. U.S. gold futures declined by 0.1%, settling at $4,293.80. U.S. President Donald Trump informed reporters of his belief that the conflict with Iran would conclude shortly, while also noting that the armed forces were encountering challenges related to the supply of certain weapons. Crude oil prices were on track for a weekly decline. Decreasing energy prices contribute to alleviating inflation worries and diminish anticipations of prolonged elevated interest rates.

Gold serves as a hedge against inflation; however, high interest rates generally diminish its attractiveness since it does not provide any yield. Market participants prepared for the U.S. Labour Department’s employment report for July, set to be released at 1230. Traders currently perceive a 55% probability of a U.S. rate hike in September, as indicated by the CME FedWatch Tool. Federal Reserve Bank of St. Louis President Alberto Musalem joined the ranks of central bankers advocating for an increase in the central bank’s interest rate target during the previous week.

The Fed maintained its interest rate target range at 3.5% to 3.75% on July 29, even as inflation remained significantly above the 2% benchmark. Data indicated that the number of Americans submitting claims for unemployment benefits experienced a slight uptick last week, whereas layoffs fell to a two-year low in July, aligning with a stable labour market. Among other metals, spot silver lost 0.4% to $61.26 per ounce, platinum fell 0.5% to $1,720.75, and palladium dropped 0.5% to $1,363.50.