Gold Bulls Hold Breath as US Nonfarm Payrolls Loom

Gold prices are experiencing fresh demand in Asia on Friday as they pull back from seven-week highs of $4,304 reached a day earlier. Despite this, gold bulls remain cautious ahead of the highly anticipated US Nonfarm Payrolls (NFP) data release.

Risk sentiment remains tepid early Friday due to renewed tensions over the Strait of Hormuz passage, which has raised doubts about a potential US-Iran peace deal. The Strait of Hormuz is a critical oil shipping route, and any disruptions can impact global oil prices.

Oil prices rebounded firmly on Iran headlines, re-igniting inflation worries and September Federal Reserve interest rate hike bets. This revival of the Middle East concerns has revived the US Dollar's appeal as a safe-haven asset, allowing it to stage a comeback while triggering a sharp pullback in gold prices.

Despite this, gold remains on track to book its best week since January, with traders eagerly awaiting the monthly US labor market report, including the critical NFP reading. The NFP is expected to rise by 80,000 in July after a 57,000 increase in June, which could have a significant impact on the Federal Reserve's outlook on interest rates and the US Dollar.