Gold prices stabilize amid anticipation of US jobs data and escalating tensions in the Middle East

Gold prices stabilized during Friday trading, but remained on track to record the second consecutive weekly decline, under pressure from the strength of the US dollar and rising Treasury bond yields, at a time when investors are awaiting the release of US non-farm payrolls data that may provide important indicators regarding the direction of the Federal Reserve’s monetary policy.

Gold in instant transactions recorded $4,184.45 per ounce by 04:19 GMT, settling almost without significant change, while its weekly losses so far amounted to more than 2 percent.

On the other hand, US gold futures rose by 0.3 percent to $4,214.70 per ounce, according to Reuters.

The US dollar is preparing to achieve weekly gains; This increases the cost of metals denominated in the US currency to holders of other currencies. US Treasury bond yields for 10 and 30 years also reached their highest levels since 2002 during Thursday's session.

Kyle Rodda, senior financial markets analyst at Capital.com, said that the markets are closely monitoring US interest rate expectations and geopolitical developments in the Middle East.

He added that the US non-farm payrolls data will be a decisive factor in shaping interest expectations, explaining that if the numbers are stronger than expected, it may enhance the possibilities of raising interest by the Federal Reserve, which may put more pressure on gold prices.

During this week, two Federal Reserve officials stressed the need to wait and collect more economic data before deciding on any additional interest rate hike.

The US jobs report for September is scheduled to be released at 12:30 GMT.

Data released on Wednesday showed that US inflation rose less than expected during August, and it also emerged that price pressures in the previous month were more moderate than initial estimates indicated.

Market pricing currently indicates a probability of only about 28 percent to raise interest during the current month, compared to about 70 percent at the beginning of the week, while expectations are still 82 percent likely to approve a new increase in December.

High interest rates usually negatively affect the attractiveness of gold, given that it is an asset that does not generate returns or interest to its holders.

In terms of geopolitical developments, sources reported that Iran is preparing for a broader and more powerful response if the United States resumes large-scale military attacks, in conjunction with the continuation of diplomatic efforts, which Iranian officials see, in private conversations, as having limited chances of success.

As for other precious metals, spot silver rose by 0.5 percent to $61.18 per ounce, platinum rose by 0.6 percent to $1,734.44, while palladium increased by 0.9 percent to $1,181.93. Despite these daily gains, the three metals are heading to record weekly losses.

The performance of Asian stocks was mixed on Friday, as the wave of bond selling deepened globally and investors awaited the release of the monthly US jobs report later today, amid continued uncertainty about interest rates and developments in the Middle East.

Oil prices have largely stabilized, despite the United States sending an additional aircraft carrier and thousands of soldiers to the Middle East, while US President Donald Trump threatened further potential escalation against Iran, according to the Associated Press.

Japan's Nikkei 225 index fell 0.9 percent to 68,326.72 points, while South Korea's Kospi rose 0.2 percent to 6,984.96 points. The Hang Seng in Hong Kong fell 2.7 percent to 23,956.32 points, recording its lowest levels since July.

On the other hand, the Australian Standard & Poor's ASX 200 index rose 0.4 percent to 8,651.30 points, and the Taiwanese TAEX index increased 0.2 percent. Markets in mainland China were closed for a public holiday.

US stock futures rose slightly, after US Treasury bond yields stabilized in early trading.

In the bond market, the yield of 10-year US Treasury bonds reached about 5.25 percent, after touching 5.34 percent yesterday, Thursday, the highest level since 2002. The yield exceeded the 5 percent level last month, with investors demanding higher returns in light of the inflationary pressures resulting from the global energy shock associated with the war with Iran, in addition to the rise in US government debt.

David Clewell, portfolio manager at T. Rowe Price, said that the 5 percent level of the 10-year US bond yield represents an “important psychological threshold” for investors.

Clewell pointed out that the flexibility of US economic growth makes a rise in 10-year bond yields of about 5.5 to 6 percent “reasonably likely.” The sharp increase in bond yields has put pressure on stock markets, as higher borrowing costs can reduce returns on stocks.

In Europe, major stock indices fell sharply yesterday, Thursday, as government bond yields jumped. On Wall Street, the Standard & Poor's 500 index rose by 0.2 percent, the Dow Jones rose by less than 0.1 percent, while the Nasdaq Composite increased by less than 0.1 percent.

Investors and traders are awaiting the US jobs report for September, scheduled to be released today, in search of additional indicators regarding the possibility of the Federal Reserve raising interest rates in October, after the central bank raised interest rates in September for the first time in three years.

Oil prices fell slightly in early trading today, with continued uncertainty regarding developments in the Middle East and the possibilities of reducing the escalation between the United States and Iran.

An American official said yesterday, Thursday, that the American army is deploying thousands of soldiers on board a group of ships, including a third aircraft carrier, in the Middle East, after Trump threatened on Wednesday to “destroy” them or reach an agreement, in reference to Iran, during his speech with journalists.

Brent crude, the global benchmark for oil prices, fell 0.2 percent to $102.13 a barrel, after rising in Thursday’s session, a much higher level than about $72 a barrel in late February, before the outbreak of war.

The dollar fell to 157.91 Japanese yen from 158.09 yen, while the euro rose to $1.1250 from $1.1244.

US Energy Secretary Chris Wright said on Thursday that he is “very confident” that Europe will release part of emergency diesel stocks to help mitigate the sharp rise in global fuel prices, at a time when European Union countries are preparing to meet with the European Commission to discuss a coordinated response to rising prices.

Wright added in statements to Fox News: “Europe can also help in the situation, and I am very confident that it will,” calling for a coordinated release of diesel stocks with the entry of the harvest season and the winter heating season. He said that the fuel is available and more of it can be put on the market.

“I think we have some positive news coming,” he added.

For his part, US Treasury Secretary Scott Besent said that Europe must make more diesel available on the market “immediately,” in the latest pressure from Washington on its European allies to contribute to alleviating the scarcity of fuel supplies and rising prices.

These statements come after the administration of US President Donald Trump informed Germany and France of the need to withdraw from their emergency stocks of diesel to help reduce global prices, or face the possibility of imposing US restrictions on diesel exports, according to three people familiar with the discussions.

European meeting Friday

In Brussels, a European Commission spokesman said that European Union countries will meet with the Commission on Friday to discuss a coordinated response to rising fuel prices.

Earlier Thursday, European Union Trade Commissioner Maroš Šefčović described any potential US ban on diesel exports as “unexpected” for the Europeans, warning of major economic repercussions of such a step.

Crisis beyond raw

The American and European move comes at a time when oil product markets are facing an increasing shortage, despite improved crude flows from some regions of the Gulf.

Refining capacities in the region and Russia were damaged, while continued shipping disruptions and a decline in exports from some producers led to a tightening of the diesel market, on which the transportation, agriculture, industry, and heating sectors depend.

The onset of the harvest season in the United States and the winter heating season in Europe also increases the market's sensitivity to diesel availability, which explains Washington's focus on releasing emergency stocks rather than waiting for new supplies to increase.