Gold Holds Above $4,300 as Weak Jobs Data Shifts Fed Bets

Key Takeaways

• Gold remains above $4,300 after gaining more than 7% last week and reaching a seven-week high.
• US nonfarm payrolls unexpectedly fell by 23,000 in July, while previous figures were revised lower.
• Markets have reduced expectations for a September Federal Reserve rate hike following the weaker labour data.
• CPI and PPI data are now the main focus for fresh signals on the Fed’s policy path.
• Treasury yields, the US Dollar and Strait of Hormuz developments could influence gold’s next move.

Gold is holding around $4,320 after a strong weekly advance, with softer US employment data supporting the metal.

The weaker labour figures prompted markets to reassess the outlook for US interest rates, while gold remained supported above $4,300.

Attention now turns to upcoming inflation data, which could provide the next major signal for rate expectations.

Why Traders Are Watching Gold

Gold’s near-term direction will be shaped by several interconnected market drivers.

• Fed Rate Expectations: Changes in September rate-hike pricing could influence demand for gold.
• US Inflation: CPI and PPI data could strengthen or weaken expectations for a less restrictive Fed.
• Treasury Yields: Changes in US yields could alter the opportunity cost of holding gold.
• US Dollar: Dollar movements could add to or ease pressure on XAUUSD.
• Geopolitical Risk: Developments around the Strait of Hormuz could affect oil prices, inflation expectations and broader sentiment.

Key Trading Levels

Gold is trading around the $4,320 area after reaching a seven-week high.

A move above $4,340 could bring $4,360 into focus and extend the recent advance.

On the downside, a break below $4,280 could increase selling pressure towards $4,240, with further weakness exposing $4,200.

Bottom Line

Gold enters the week with momentum still supported by softer US labour conditions, but the next move will depend on incoming inflation data and its impact on rate expectations.

Traders should monitor CPI, PPI, Treasury yields, the US Dollar and geopolitical developments for fresh signals on XAUUSD.

For a deeper analysis of gold’s recent rally, Fed expectations and key technical levels, read this article.