Following a record high of $3,578 earlier in the week, gold consolidates and remains stable at $3,550.
Ahead of the August US Nonfarm Payrolls report, which is viewed as the primary driver of the Fed's next action, traders remain cautious.
Bullion is still well supported near record levels due to the softening US dollar and declining Treasury yields.
As investors become cautious ahead of the US Nonfarm Payrolls (NFP) report, which is scheduled at 12:30 GMT, gold (XAU/USD) is trading flat on Friday, hovering around $3,550 at the time of writing. With traders opting to await new signals from the August US employment report, the precious metal is consolidating following Thursday's slight pullback from record highs above $3,570.
Cooling momentum has been indicated by recent job market indicators. In August, ADP private payrolls increased by 54K, which was less than the previous 106K and below expectations. Meanwhile, JOLTS job openings decreased from 7.36 million to 7.18 million. The most recent week's first jobless claims, which were 237K, exceeded both the previous 229K and the 230K forecast, highlighting indications of a slowing labor demand. In the meantime, the Manufacturing (43.8) and Services (46.5) ISM Employment Indexes continue to be in contractionary territory. The Federal Reserve (Fed) is currently more concerned about job market concerns than persistent inflation, according to the spate of weak readings.
When combined, the data show that the labor market is slowing down, which supports the notion that the Fed would loosen policy during its meeting on September 16–17. Markets have already factored in a nearly complete 25 basis point (bps) rate cut, but the central bank's decision to remain with that move or explore a greater 50 bps cut to combat weakening growth may depend on the results of the NFP report. A lower US dollar, muted Treasury rates, and the Fed's dovish stance all work together to maintain gold bullion close to record highs.
Market movers: Gold holds steady as rates decline and the US dollar declines
As traders realign ahead of the NFP report, the US Dollar Index (DXY), which compares the value of the US dollar to a basket of six major currencies, drops around 98.00, reversing Thursday's gains.
The US Treasury yields declined across the curve as global bond markets calmed following recent spikes. The benchmark 10-year was at 4.161%, which was close to its lowest since May 1, the 30-year was at a three-week low of 4.855%, and the rate-sensitive 2-year was at 3.590%, which was also its lowest since May 1. Lower yields mitigate the downside of gold by lowering the opportunity cost of storing non-interest-bearing bullion.
It is anticipated that the August Nonfarm Payrolls report would show a 75K increase in jobs, which is little higher than the 73K in July. In addition to payrolls, average hourly earnings are predicted to be 0.3% MoM, which is the same as the previous month, and annual wage growth will drop from 3.9% YoY to 3.7% YoY. The unemployment rate, which has been at its highest since 2021, is expected to slightly increase to 4.3% from 4.2%.
An executive order reducing duties on Japanese auto imports from 27.5% to 15% was signed by US President Donald Trump on Friday. The measure will take effect in seven days and be retroactive to early August. The action is a component of a larger economic package between the United States and Japan that also includes a deal for Tokyo to increase its purchases of Alaskan LNG and a $550 billion Japanese investment commitment in US energy, infrastructure, and semiconductor projects. The agreement is viewed as a major boon for Japanese automakers, even if the tariff relief does not apply to airplanes or parts.
Fed candidate Stephen Miran reacted to worries about political influence at the central bank on Thursday by telling a Senate panel that he is "not at all" Trump's puppet. If confirmed, Miran intends to take unpaid leave from his advising position at the White House, a step that critics claim still compromises the Fed's independence. Miran promised to act on macroeconomic analysis and stick to the Fed's dual mandate notwithstanding the independence dispute.
Due to ongoing uncertainty about how much tariffs may be hurting the labor market and how much they may accelerate inflation, Chicago Fed President Austan Goolsbee said Thursday that he is not convinced if an interest-rate drop will be warranted at the Fed's September 16–17 meeting.
Ahead of the August US Nonfarm Payrolls report, which is viewed as the primary driver of the Fed's next action, traders remain cautious.
Bullion is still well supported near record levels due to the softening US dollar and declining Treasury yields.
As investors become cautious ahead of the US Nonfarm Payrolls (NFP) report, which is scheduled at 12:30 GMT, gold (XAU/USD) is trading flat on Friday, hovering around $3,550 at the time of writing. With traders opting to await new signals from the August US employment report, the precious metal is consolidating following Thursday's slight pullback from record highs above $3,570.
Cooling momentum has been indicated by recent job market indicators. In August, ADP private payrolls increased by 54K, which was less than the previous 106K and below expectations. Meanwhile, JOLTS job openings decreased from 7.36 million to 7.18 million. The most recent week's first jobless claims, which were 237K, exceeded both the previous 229K and the 230K forecast, highlighting indications of a slowing labor demand. In the meantime, the Manufacturing (43.8) and Services (46.5) ISM Employment Indexes continue to be in contractionary territory. The Federal Reserve (Fed) is currently more concerned about job market concerns than persistent inflation, according to the spate of weak readings.
When combined, the data show that the labor market is slowing down, which supports the notion that the Fed would loosen policy during its meeting on September 16–17. Markets have already factored in a nearly complete 25 basis point (bps) rate cut, but the central bank's decision to remain with that move or explore a greater 50 bps cut to combat weakening growth may depend on the results of the NFP report. A lower US dollar, muted Treasury rates, and the Fed's dovish stance all work together to maintain gold bullion close to record highs.
Market movers: Gold holds steady as rates decline and the US dollar declines
As traders realign ahead of the NFP report, the US Dollar Index (DXY), which compares the value of the US dollar to a basket of six major currencies, drops around 98.00, reversing Thursday's gains.
The US Treasury yields declined across the curve as global bond markets calmed following recent spikes. The benchmark 10-year was at 4.161%, which was close to its lowest since May 1, the 30-year was at a three-week low of 4.855%, and the rate-sensitive 2-year was at 3.590%, which was also its lowest since May 1. Lower yields mitigate the downside of gold by lowering the opportunity cost of storing non-interest-bearing bullion.
It is anticipated that the August Nonfarm Payrolls report would show a 75K increase in jobs, which is little higher than the 73K in July. In addition to payrolls, average hourly earnings are predicted to be 0.3% MoM, which is the same as the previous month, and annual wage growth will drop from 3.9% YoY to 3.7% YoY. The unemployment rate, which has been at its highest since 2021, is expected to slightly increase to 4.3% from 4.2%.
An executive order reducing duties on Japanese auto imports from 27.5% to 15% was signed by US President Donald Trump on Friday. The measure will take effect in seven days and be retroactive to early August. The action is a component of a larger economic package between the United States and Japan that also includes a deal for Tokyo to increase its purchases of Alaskan LNG and a $550 billion Japanese investment commitment in US energy, infrastructure, and semiconductor projects. The agreement is viewed as a major boon for Japanese automakers, even if the tariff relief does not apply to airplanes or parts.
Fed candidate Stephen Miran reacted to worries about political influence at the central bank on Thursday by telling a Senate panel that he is "not at all" Trump's puppet. If confirmed, Miran intends to take unpaid leave from his advising position at the White House, a step that critics claim still compromises the Fed's independence. Miran promised to act on macroeconomic analysis and stick to the Fed's dual mandate notwithstanding the independence dispute.
Due to ongoing uncertainty about how much tariffs may be hurting the labor market and how much they may accelerate inflation, Chicago Fed President Austan Goolsbee said Thursday that he is not convinced if an interest-rate drop will be warranted at the Fed's September 16–17 meeting.
