• Gold Nudges Lower
• Optimism Building Over NFPs?
• Dollar Strengthens

Gold prices began losing shine ahead of the nonfarm payrolls data Friday, despite being on track for its second straight week of gains.

Investors will be watching the data for an indication of the health of the US, and wider global economy, taking trading cues from the data. According to reports, markets have already priced in any figure over 70, 000, with any lower rate of jobs added to the economy is likely to cast serious doubts over the strength of American recovery.

Just a few hours before the release at 13:30 BST, speculators began speaking of the possibility that the data may actually surprise the markets – to the upside. "People are concerned that tonight's non-farm payrolls figures might be better than expected, which will decrease the chances of quantitative easing by the Fed - bad news for gold," said Yuichi Ikemizu, head of commodity trading, Japan, Standard Bank.

Safe haven gold may well be on track to continue the decline that began before the release, with a series of rate cuts from central banks across the euro zone Thursday having only served to strengthen the dollar further in the face of fears over a global economic slowdown.

"I would certainly highlight yesterday's ADP (private sector employment) number. If that means we're going to get good non-farm payrolls this afternoon, the likelihood of (a third round of U.S.) quantitative easing diminishes significantly, which is very bad for gold," Natixis analyst Nic Brown said. The dollar index gained more than 1 percent early today on its previous session - its biggest daily rise in nearly eight months and a sign that investor confidence in economic growth elsewhere is waning.

The U.S. gold futures contract for August delivery edged down 0.2 percent to $1,605.90.

The physical bullion market remained subdued, with buyers sidelined after prices rose above $1,600 and potential sellers eyeing $1,620 or above, dealers said.

The precious metal is set to see more movement after the release of the data, along with a strong of other commodities and assets which had been quashed by market uncertainty ahead of the big data release events at the end of this week. As economic calendars deliver their largest major event of the week, investors will likely be breathing a sigh of relief.

Sarah Cox, Markets Writer. ForexSpace.com