Gold prices slid to a two-week low Friday as investors prepared for the possibility that the U.S. jobs report could beat economists' expectations.
Gold prices fell as low as $1,283.50 a troy ounce, a 1.9% decline on the day and the lowest price hit in intraday trading since July 19. Gold later pared some losses and recently traded at $1,288.28 an ounce.
Economists forecast that nonfarm payrolls in the U.S. increased by 183,000 and the unemployment rate fell to 7.5% from 7.6% in July, according to a survey.
Positive jobs data would add pressure to gold prices, which are down 23% year to date, because it would increase the likelihood that the Federal Reserve would scale back post-financial-crisis stimulus measures in the coming months.
These measures—in the form of bond purchases—injected money into the economy, weakening the dollar as a result. Gold bulls saw a weaker dollar as an inflation risk, and in past years, piled into gold as a hedge against rising prices.
"Today the bears are looking for good figures," which is why gold fell, said Alasdair Macleod, head of research at London-based gold dealer GoldMoney.
Gold prices fell Thursday after European Central Bank President Mario Draghi reiterated that interest rates in Europe would remain low "for an extended period of time." A stronger-than-expected U.S. manufacturing reading also weighed on prices.
Mr. Draghi's remarks weighed on the euro, pushing the dollar higher. The stronger dollar dragged gold down because it made the precious metal relatively more expensive for investors who count returns in other currencies.
"While easy global monetary policies tend to be gold positive," in this instance, "bullion is more influenced by its positive correlation with the euro," said James Steel, a metals analyst at HSBC.
Other precious metals followed gold lower Friday. In the European morning, silver was down 0.3% at $19.332 an ounce, platinum was 1.0% lower at $1,421.75 an ounce and palladium was down 0.5% at $726.20 an ounce.
