Gold prices held steady on Wednesday as investors braced for a monthly U.S. payrolls report that could influence how swiftly and deeply the Federal Reserve cuts interest rates this year.
Spot gold held its ground at $2,493.34 per ounce by 0200 GMT after hitting its lowest level in more than a week on Tuesday. U.S. gold futures were nearly unchanged at $2,524.80.
Economists surveyed by Reuters expect the non-farm payrolls report on Friday to show an increase of 165,000 jobs in August, up from a rise of 114,000 in July. Before that, job openings data on Wednesday and the ADP employment and jobless claims reports on Thursday will be in the spotlight.
Traders see a 41% chance of a 50-basis-point (bp) rate cut on Sept. 18 and a 59% chance of a 25-bp reduction, according to the CME Group's FedWatch Tool.
"If the jobs data is weak, it will increase the probability of a 50-bp cut and raise worries about growth slowdown, which will be supportive for gold," said Kyle Rodda, a financial market analyst at Capital.com.
"But from a technical viewpoint, positioning is a bit too long for gold and this might limit upside," said Rodda, adding that prices were likely to scale new highs in the longer run, even if there was a pullback in the short-term because of positioning.
Bullion is considered a safe asset during times of political and economic uncertainty and tends to thrive in a low rate environment.
So far this year, gold has gained 21%, hitting an all-time high of $2,531.60 on Aug. 20, driven by U.S. rate cut bets and the Middle East concerns.
Data on Tuesday showed that U.S. manufacturing contracted at a moderate pace in August amid some improvement in employment.
Spot silver fell 0.4% to $27.94 per ounce, platinum gained 0.2% to $904.65 and palladium was flat at $938.57.
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