Gold prices edged higher on Friday (September 5th) and were on track for their best weekly gain in three months, as expectations of a Federal Reserve interest rate cut boosted bullion's appeal and investors awaited US non-farm payrolls data due later today.

Spot gold rose 0.1% to $3,548.49 an ounce, as of 09:34 GMT. Bullion has gained 3% so far this week. US gold futures for December delivery were steady at $3,605.10.

US jobless claims rose more than expected last week, while the ADP National Employment Report showed private payrolls grew less than expected in August, both further signs of a weakening labor market.

Investors are now focused on the US non-farm payrolls report, due at 12:30 GMT, which is expected to show an increase of 75,000 jobs in August, according to a Reuters poll, compared with 73,000 in July.

Gold's near-term direction depends on the US jobs report and its impact on rate cut expectations, bond yields, and the dollar. A weak NFP report could push prices closer to $3,650, while support levels at $3,450 to $3,500 remain key, said Ole Hansen, head of commodity strategy at Saxo Bank.

Several Federal Reserve officials speaking earlier this week pointed to labor market concerns as a key factor supporting the case for a rate cut. Traders anticipate the Fed will deliver its first rate cut of the year, lowering rates by 25 basis points at the conclusion of its two-day policy meeting that begins on September 17.

Gold, which hit a record high of $3,578.50 on Wednesday, offers no yield and typically performs well in low-interest environments. "The combination of lower funding costs, concerns about the Fed's independence, geopolitical risks, a steepening yield curve coupled with a weaker dollar all point to further gains in precious metals," Hansen said.

Elsewhere, spot silver rose 0.2% to $40.76 an ounce and is headed for its third straight weekly gain. Platinum rose 1% to $1,381.17, and palladium fell 0.7% to $1,119.23. (alg)

Source: Reuters