As the inverse relationship between gold and the U.S. dollar strengthens, the yellow metal appears to be on track for firm gains in the final three months of the year as the greenback heads south, strategists say.
U.S. nonfarm payrolls for September - released on Tuesday following a delay due to the partial government shutdown - came in at 148,000, well below expectations of 180,000. The reading boosted gold prices 2 percent to a three-week high of $1,344 per ounce, while the dollar index tumbled to an eight month low.
(Read more: Gold bulls strike back as US national debt surges)
Analysts told CNBC that the inverse relationship between gold and the dollar is strengthening, which is good news for battered gold prices given expectations that the Federal Reserve will maintain its monetary stimulus for longer than previously expected.
"The relationship between gold and the dollar never really went away, it just stretched its friendship," said David Lennox, resources analyst at equity research firm Fat Prophets.
The inverse correlation between gold and the dollar weakened amid the tapering fallout, which saw gold decline around 1.8 percent from late May to mid-June, while the dollar index fell around 2.8 percent over the same time period.
(Read more: The odd reason why gold rose on the Senate deal)
According to Lennox, now that this correlation is gaining traction again, gold could see a rally to $1,500 per ounce by year-end on further dollar weakness.
"For the U.S. government to address its budget issues, it will have to spend less on programs and shrink in size within the U.S. economy. If this happens the U.S. dollar has no other direction to go but down... This U.S. budgetary issue is key to the whole gold scenario," he said.