Singapore - Gold held declines from a two-day losing streak on Friday, ahead of a crucial US jobs report as traders waited for clues about the timing of a Federal Reserve rate hike.
Spot gold was little changed at $1 124.96 an ounce by 08:40, after losing over 1% in the last two sessions. The metal, which fell to a one-week low of $1 121.35 on Thursday, was on track for a second straight weekly decline.
Traders are watching the US nonfarm payrolls report due later in the day to gauge whether the Fed would begin increasing rates at its policy meeting this month.
Expectations of a September rate hike have been lowered recently due to the volatility in global markets, although the uncertainty around the timing of an eventual rate hike has taken a toll on bullion.
"Gold is already pricing in diminished odds of a September rate hike," said Howie Lee, an analyst at Phillip Futures.
"A strong labour market report will increase the odds of a rate raise in two weeks time, sending the dollar up and gold prices down. A weak report will dampen what are already very low odds of a rate raise and send gold prices up," said Lee.
Economists polled by Reuters expect the US economy to have produced 220 000 new nonfarm jobs last month.
According to Fed policymakers and other economists, employment and wage growth for August would likely need to be particularly strong for the Fed to act this month, while the sharp recent gyrations in stocks, bonds and currencies would need to dissipate.
Other data on the labour market this week, including weekly jobless claims on Thursday, has been encouraging.
The data along with weakness in the euro pushed the dollar index to its highest in over two weeks at 96.616 on Thursday.
Higher rates would hurt non-interest-paying bullion and boost the dollar.
Also weighing on gold was the absence of Chinese buyers with markets in the major gold consumer closed until Friday for public holidays.
Other data also showed weakness in physical demand. Sales of gold coins and minted bars at the Perth Mint dipped in August from a nine-month high in the previous month.
Gold prices in India swang to a discount to the global benchmark this week for the first time since mid July as a weak monsoon dampened demand in the world's second-biggest consumer.