REUTERS

Gold prices rose on Friday, holding close to record highs hit earlier this week, as signs of a weakening US labor market reinforced expectations the Federal Reserve will deliver its first rate cut of the year next week.

Spot gold was up 0.4 percent at $3,648.55 per ounce, as of 02:25 p.m. EDT (1825 GMT), close to Tuesday’s all-time high of $3,673.95. The metal has gained 1.7 percent so far this week and is poised for a fourth consecutive weekly advance.

US gold futures for December delivery settled 0.3 percent higher at $3,686.40.

“Weaker employment and spotty inflation... priced in with the Fed having to cut rates is pushing metals higher because there is the risk of longer-term inflation,” said Daniel Pavilonis, senior market strategist at RJO Futures.

Recent data showing a jump in jobless claims, alongside soft nonfarm payrolls and revisions that cut 911,000 jobs from the past year, point to cooling momentum in the economy.

At the same time, consumer prices posted their sharpest monthly gain in seven months in August, but investors are giving more weight to labor market weakness than to sticky inflation in shaping rate expectations.

Fed fund futures fully price in a 25-basis-point cut at the September 17 meeting, with bets on a larger 50-bps move easing.