Gold prices drop for second week despite modest Friday gains

Gold prices declined for the second consecutive week, registering a 0.4 percent loss. This came despite a slight uptick on Friday following the release of the US November jobs report, which showed gradual improvement in the labor market.

Modest Friday gains

Spot gold rose 0.2 percent to USD 2,636 per ounce, while gold futures increased 0.4 percent to USD 2,659.60 per ounce.

The gains were driven by a weaker dollar and a decline in U.S. Treasury yields after the jobs report revealed nonfarm payrolls rose by 227,000 in November, significantly higher than the 36,000 jobs added in October.

Jobs Data and Interest Rate Expectations

The unemployment rate edged up to 4.2 percent in November from 4.1 percent over the prior two months, contrary to expectations of stability.

These figures bolstered expectations for an interest rate cut by the Federal Reserve, which has supported gold prices throughout the year.

According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut at the Fed's December meeting surged to 87 percent, up from 72 percent before the jobs report was released.

Performance of other precious metals

Among other precious metals, silver fell 1.1 percent to USD 31 per ounce despite posting weekly gains.

Platinum declined 1.3 percent to USD 925.78, and palladium dropped 0.5 percent to USD 957.83, with both metals marking their second consecutive weekly losses.

Market outlook and investor sentiment

Investors are closely watching the Federal Reserve's approach to interest rates, which is expected to play a key role in shaping the trajectory of gold and other precious metals.

With signs of a strengthening labor market and stable inflation, analysts predict short-term gold price volatility but expect it to hold above key support levels if rate cuts are implemented.