Gold Prices Slump as Dollar Strengthens and Yields Rise

Gold prices remained stable on Friday but are poised for a second consecutive weekly decline. The metal is being pressured by a stronger US dollar and rising Treasury yields, which have increased borrowing costs and diminished gold's attractiveness.

The US dollar is heading for a weekly gain, making gold more expensive for holders of other currencies. Yields on 10- and 30-year Treasuries hit their highest levels since 2002 on Thursday, contributing to the downward pressure on gold prices.

Market participants are waiting anxiously for key US payrolls data, which will provide clues about the Federal Reserve's policy path. According to Kyle Rodda, senior financial market analyst at Capital.com, 'US nonfarm payroll data will be critical for rate expectations. If it comes in hot, it may increase the chances of rate hikes from the Fed. That would potentially weigh even further on gold prices.'

The September US nonfarm payrolls report is due out at 1230 GMT on Friday, and traders are pricing in only a 28% chance of a rate hike this month, down from about 70% earlier in the week. They still see an 82% chance of a rate increase in December.