Gold Prices Ticked Higher Amid Fed Rate Hike Odds

Gold prices inched higher on Thursday as traders held back from making big moves ahead of Friday's highly anticipated US jobs report. The US dollar remained soft, allowing gold to edge up to $4,081 an ounce. Meanwhile, US gold futures stood at a richer price near $4,137, reflecting the added cost of carrying positions due to higher interest rates.

The market is currently pricing in around 57% odds that the Federal Reserve will hike rates at its September 15-16 meeting. Strong hiring data on Friday could keep wage pressure and inflation concerns alive, pushing short-term yields up and potentially weighing on gold prices. This is because holding an asset that doesn't pay interest becomes more expensive when interest rates rise.

The upcoming jobs report has the potential to move both the metal's spot price and the shape of its futures curve. Gold is acting as a live read on front-end rates, with its price tied to the Fed's rate hike odds. If the data nudges markets toward a higher chance of a September hike, short-term yields are likely to rise, putting pressure on gold prices.