Gold Prices Slip Over 1% Amid Rising Oil Costs and US Payroll Data Focus

Gold prices eased on Friday following a rebound in oil prices, which fanned inflation worries and bolstered expectations for higher-for-longer interest rates. The market downturn occurred as investors awaited key US payrolls data scheduled for later in the day.

Spot gold fell 1.1% to $4,044.09 per ounce by 0501 GMT, though it remained on track for its best week since late August. Meanwhile, US gold futures for December delivery dropped 1.5% to $4,053.30.

"Crude oil has rebounded mostly over the past day, which remains one of the inflationary knockbacks pressuring gold," said Ilya Spivak, head of global macro at Tastylive.

Oil rose more than 1% during the session. However, it was still on track for a sharp weekly drop due to expectations of a de-escalation in the Iran conflict following US election results, alongside persistent Middle East supply concerns that continued to support current prices.

Higher energy costs can reinforce expectations that the Federal Reserve will keep interest rates elevated for longer periods, which in turn pressures non-yielding bullion. Traders currently see a 68% chance that the Fed will raise rates in December, down from the near certainty expected last month, according to CME's FedWatch tool. On Thursday, two Fed officials made a case for modest and steady rate increases to tackle above-target inflation.

In broader market conditions, Asia's tech-heavy markets declined due to fears of increased regulatory scrutiny and a slowdown in the AI build-out, unleashing the steepest fall in US stocks since the tariff-triggered rout in April 2025.

"In risk-off conditions like this, we're seeing gold positions get liquidated to free up cash and cover margin calls elsewhere. It's not the first time we've watched this dynamic temporarily override gold's usual safe-haven appeal," said Tim Waterer, chief market analyst at KCM Trade.

The US non-farm payrolls report is due at 1330 GMT. Additionally, Goldman Sachs lowered its end-2026 gold price forecast on Thursday to $4,150 per ounce from $4,650, citing the Federal Reserve's more hawkish stance.

Among other precious metals, spot silver fell 0.5% to $51.51 per ounce, platinum dipped 0.3% to $1,512.83, and palladium dropped 1.1% to $1,020.10. Despite these daily dips, all three metals were headed for weekly gains.

"Global macroeconomic shifts, such as fluctuating energy costs and shifting central bank interest rate expectations, have an immediate ripple effect across asset classes. For entrepreneurs and businesses, periods of broader market volatility and liquidations underscore the importance of maintaining strong cash reserves and carefully managing liquidity to navigate unpredictable financial cycles." — Dr. Shishir Gupta, Founder & CEO, StartupLanes