Nov 6 (Reuters) - Gold slipped on Friday as a see-saw session in oil kept inflation worries alive ahead of key US jobs data, though the metal was still headed for its strongest week in over two months.
Spot gold fell 0.4% to $4,070.59 per ounce by 1124 GMT, but was up 5% for the week so far. US gold futures for December delivery dropped 0.8% to $4,080.70.
Brent crude climbed back towards $100 a barrel, after touching the mark earlier in the session, but was still set for a sharp weekly drop on expectations of a de-escalation in the US-Iran war after midterm election results. Persistent Middle East supply concerns, however, continued to support prices.
There's an "extremely strong correlation again at the moment" between oil prices, inflation and gold rates, said UBS analyst Giovanni Staunovo.
Higher energy costs can warrant the need for tighter monetary policy, raising the opportunity cost of holding non-yielding bullion.
Investors are awaiting the US non-farm payrolls report, due at 1330 GMT, for cues on the US Federal Reserve's interest rate trajectory.
"If it is in line with expectations or weaker, then I expect gold prices to be supported," Staunovo said, adding that a weaker labour market diminishes the path of rate hikes.
Two Fed officials on Thursday backed small, steady rate hikes to rein in above-target inflation.
Traders currently see a 70% chance that the Fed will raise rates in December, according to CME's FedWatch tool, opens new tab.
Goldman Sachs on Thursday lowered its end-2026 gold price forecast to $4,150 per ounce from $4,650, citing the implications of the US Fed's more hawkish policy stance in recent months.
Lower gold prices encouraged Indian retail buying ahead of the key Diwali festival. Gold had dropped to a one-year low of $3,869.85 an ounce on October 30.
Among other metals, spot silver gained 0.6% to $52.04 per ounce and platinum rose 0.4% to $1,523.32, while palladium fell 1% to $1,020.9. All three were poised for weekly gains.
Reporting by Sherin Sans in Bengaluru; additional reporting by Swati Verma; Editing by Joyjeet Das
