Gold Slips as Dollar Firms Ahead of Jobs Data

Gold prices edged lower on Wednesday as the dollar firmed and traders pulled back ahead of Friday's U.S. nonfarm payrolls report, the week's most consequential data point.

Spot gold fell 0.4% to $2,329.30 an ounce by late morning in New York. U.S. gold futures for August delivery settled at $2,335.00, down $9.70.

The move came as the dollar index rose 0.2%, pressuring commodities priced in the currency. Yields on 10-year Treasury notes held near 4.34% after a soft auction of seven-year notes drew tepid demand.

"The market is waiting for payrolls," said Philip Newman, a director at Metals Focus in London. "Anything above 200,000 would reinforce the Fed's cautious stance and push gold back toward $2,300."

Traders are pricing in a 64% chance the Federal Reserve cuts rates in September, down from 68% a week ago, according to CME FedWatch.

Gold is now on track for its fourth consecutive weekly decline, its longest losing streak since September. The metal has fallen roughly 4% from its May 20 record of $2,449.89.

Central bank buying has continued to underpin prices. The People's Bank of China added 5 tonnes to its reserves in May, data showed Monday, extending a buying spree that began in late 2022.

India's gold imports rose to a two-month high in May as jewellers stockpiled ahead of a tax-cut proposal in the federal budget, a government source told Reuters.

Physical demand has been patchy. Premiums on the Shanghai Gold Exchange have narrowed from March peaks, and Indian dealers offered discounts of up to $5 an ounce in early June.

ETF holdings remain a drag. The SPDR Gold Trust, the world's largest gold-backed ETF, reported outflows of 2.6 tonnes Tuesday, bringing May's total outflow to 12.1 tonnes.

Friday's payrolls number is the next test. A print below 150,000 would revive bets on early easing and likely push gold above $2,350. A number above 250,000 would test support near $2,300, a level that has held through May's selloff.

(Editing by AlphaScala)