XAU/USD trades cautiously ahead of US jobs data as geopolitical tensions and higher oil prices support the dollar and limit gains.
Gold prices stabilized below $4,250 in Asian trading on Friday, pausing a retracement from recent highs. Investors remain on the sidelines ahead of the US Nonfarm Payrolls report, balancing geopolitical risks and expectations of Federal Reserve policy.
The US dollar strengthened amid escalating tensions in the Middle East, including reports of imminent attacks on Saudi Arabia and restrictions on vessel passage in the Strait of Hormuz. Higher crude oil prices, driven by supply disruption fears, also fueled inflation concerns, reinforcing bets on a Fed rate hike by year-end.
Markets are pricing in over an 80% chance of a Fed rate increase, according to the CME Group’s FedWatch Tool. This outlook, combined with safe-haven demand for the USD, continues to cap gold’s upside.