Spot gold dropped 0.4% at $3,544.15 per ounce

 Gold prices dropped on Thursday as traders took profits after a record-breaking rally, with spotlight now shifting to the U.S. payrolls report for fresh cues on the central bank’s policy trajectory.

Spot gold dropped 0.4% at $3,544.15 per ounce by 1527 GMT.

The U.S. non-farm payrolls report is due on Friday. This comes after spot gold prices reached a record high of $3,578.50 on Wednesday, as weak job opening data firmed U.S. rate cut bets and lingering uncertainties supported safe-haven demand.

Data earlier in the day showed the number of Americans filing new applications for jobless benefits rose more than expected last week.

With Fed rate cut expectations already largely priced in, tomorrow’s monthly jobs report becomes the key focal point. Any shift in that outlook would directly impact the dollar and, by extension, gold, said David Meger, director of metals trading at High Ridge Futures.

Several central bank officials who spoke on Wednesday said labor market worries continue to animate their belief that rate cuts still lie ahead for the central bank.

The market is now pricing in a 98% probability of a 25 bp rate cut this month, according to CME Group’s FedWatch tool.

Gold, a non-yielding asset, tends to perform well in low interest rate environments and during periods of uncertainty.

Standard Chartered said it expects further highs in gold, noting that safe-haven demand is being fuelled by persistent uncertainty around tariffs and growing concerns over Fed independence.

U.S. President Donald Trump escalated his battle with the country’s central bank by attempting to fire Governor Lisa Cook – a move that has triggered a high-stakes legal challenge and raised fresh concerns over the bank’s independence.