Gold (XAU/USD) is consolidating below the $4,500 mark during the Asian session on Friday, following strong gains over the previous two days and remaining close to its weekly high reached the day before. This consolidation comes as traders await the release of the US Nonfarm Payrolls (NFP) report, which is expected to provide further cues regarding the Federal Reserve's policy path amid diminishing expectations for a rate hike in September [1]. According to TD Securities, the NFP data is a key focus for precious metals markets, especially as the Fed has recently adopted a more hawkish tone and energy market tensions have escalated. Despite the immediate data risk, TD Securities maintains a constructive outlook for precious metals, citing an improved landscape due to a renewed dollar debasement theme and uncertainty over future Fed hikes [1].
Federal Reserve Governor Christopher Waller indicated on Thursday that he is inclined to keep interest rates steady at the September FOMC meeting, provided there are no surprises in upcoming inflation data. This dovish signal led to a sharp decline in US bond yields and the US Dollar (USD), which supported gold's recovery from a four-week low touched on Wednesday. However, ongoing inflation risks from higher energy prices leave open the possibility of a rate hike later in the month, which has helped the USD Index (DXY) rebound from a one-and-a-half-week low, thereby capping gold's upside [1].
Geopolitical tensions are also influencing market sentiment. Crude oil prices are near their highest levels since July 24, driven by renewed US-Iran hostilities and clashes over the Strait of Hormuz. Iran reportedly targeted US military bases in Kuwait and the United Arab Emirates (UAE) on Thursday. In response, US Vice President JD Vance stated that President Donald Trump has several options to address the situation with Tehran, including economic, military, diplomatic, and covert measures. Additionally, South Korea is preparing to deploy military assets to the Strait of Hormuz before the end of the year to support freedom of navigation [1].
These geopolitical developments are maintaining a risk premium in the market, supporting crude oil prices and potentially underpinning the safe-haven USD. However, the near-term direction for gold remains dependent on the outcome of the US jobs report [1].
CONCLUSION
Gold is consolidating below $4,500 as traders await the US Nonfarm Payrolls report for further guidance on the Federal Reserve's rate policy. While geopolitical tensions and energy market risks support safe-haven demand, the immediate direction for gold will be shaped by upcoming US employment data and Fed signals.