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Spot gold rises as NFP Report looms amid soft U.S. data

Spot gold in US hovered at $1,942.22 per ounce by early Friday morning GMT, setting itself up for over a 1% weekly gain. U.S. gold futures were also bullish, trading near $1,970. The commodity’s strong showing comes on the back of weakened prospects for U.S. interest rate hikes this year, particularly as market participants await the U.S. non-farm payrolls (NFP) report due later in the day.

The general mood among investors appears cautious but optimistic, as economic indicators from the U.S. this week have largely been softer than expected. Job openings in July hit their lowest level in 2.5 years, and second-quarter economic groa³as

The decline in U.S. Treasury yields has played a pivotal role in gold’s recent upward trajectory. Treasury yields are set to conclude the week approximately 3% lower, largely owing to subdued inflation data. The declining yields have boosted the allure of gold, a non-interest-bearing asset, especially as the Federal Reserve seems unlikely to adjust interest rates in the near term.

The upcoming NFP report could further solidify gold’s bullish run. If the report prints a lower-than-expected number of new jobs, it’s likely to push Treasury yields even lower, thereby adding another layer of shine to gold. On the flip side, a stronger report could put a damper on the current rally

Given the week’s economic data and the diminishing likelihood of an imminent rate hike by the Fed, the short-term outlook for gold prices remains bullish. Of course, this could change with the release of the NFP report, but as it stands, gold is on track for its second consecutive week of gains.

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