Gold edged lower on Friday after a stronger-than-expected US jobs report reinforced the case for the Federal Reserve to keep a September rate hike on the table. The metal is still holding most of a two-day rebound sparked by dovish comments from Waller, with next week's inflation data now shaping up as the next catalyst.
The US economy added 162,000 jobs in August, well above economists' expectations for a gain of about 53,000, while the unemployment rate held at 4.1%. The reading marked a stronger rebound from July, when payrolls had initially been reported as falling by 23,000.
Jobs data complicates the dovish shift
At 08:48 ET (12:48 GMT), XAU/USD traded down 2% at $4,391.61 an ounce, while Gold Futures fell 0.6% to $4,514.19. Silver traded flat at $66.94 an ounce, and platinum slipped 0.6% to $1,813.06. The stronger labor-market reading initially pressured gold by reducing the urgency for the Fed to ease policy, since higher interest rates tend to weigh on bullion, which pays no yield.
Still, gold's reaction stayed contained, and investors kept their focus on the broader rate outlook. Wage growth remained relatively contained despite the jobs beat, leaving the August consumer-price report due next week as a potentially bigger swing factor for the Fed's September 15-16 meeting.
Waller's comments drove the rebound
Gold had rebounded almost 2% on Thursday, snapping a three-session decline, after Waller said he could support holding rates steady if incoming data confirms inflation is continuing to cool. He said August inflation figures would heavily influence his decision, though he left the door open to a hike if price pressures return.
Markets have since pulled back sharply on expectations for a September increase: the probability of a hike has fallen to around even odds from roughly 70% earlier this week. The dollar also weakened as the yen strengthened nearly 2% on Thursday, its best day since Japanese and US authorities intervened in currency markets just over a month ago. A weaker dollar makes gold cheaper for buyers holding other currencies, though the US Dollar Index edged up 0.2% to 99.03 on Friday as it firmed after the jobs data.
Technical resistance caps the recovery
Gold remains well above the roughly $4,282 low it touched earlier in the week, but its recovery has run into resistance around the 200-day moving average near $4,526. A sustained break above that level would improve the short-term technical picture, while a failure to reclaim it could leave bullion vulnerable to another pullback.
Tony Sycamore, senior market analyst at IG, said gold's latest gains came as pressure from energy prices, Treasury yields and the dollar eased after signs that the latest Middle East flare-up may have peaked. He added that gold remains above the $3,942 late-June low, supporting his medium-term view that the metal has formed a base there.
Source: Investing.com
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