Gold prices (XAU/USD) pulled back slightly from a three-day high during the early European session on Friday, trading around the $2,640 mark. Despite the dip, the precious metal remains up by over 0.40% for the day. The retreat comes after a rise in U.S. weekly jobless claims signaled potential weakness in the labor market, which could prompt the Federal Reserve (Fed) to continue cutting interest rates. This outlook led to a modest drop in U.S. Treasury bond yields, providing support for gold, which benefits from lower yields and a softer risk environment.
However, stronger-than-expected U.S. consumer inflation data released on Thursday tempered expectations of a significant rate cut by the Fed in November. As a result, the U.S. Dollar (USD) steadied after its recent pullback, creating a headwind for gold prices.
Market participants are now focused on upcoming U.S. economic indicators, including the Producer Price Index (PPI), the Michigan Consumer Sentiment Index, and Fedspeak, for further clues on the direction of gold prices in the short term.
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