Gold (XAU/USD) paused its two-day recovery on Friday, trading quietly around $4,472 after briefly climbing above $4,500 on Thursday, which marked a nearly 2% gain. This rise was attributed to a softer US Dollar, a modest pullback in Treasury yields, and less hawkish remarks from Federal Reserve Governor Christopher Waller, who noted signs of disinflation and stated that the September rate decision would depend on August inflation data. Waller's comments led traders to reduce the probability of a 25-basis-point rate hike at the September 15-16 Fed meeting to around 50%, down from 63% prior to his remarks [1].
The US Dollar Index (DXY) steadied around 99.11 after losing about 0.55% on Thursday and falling below 99.00, its lowest level in over a week [1]. Meanwhile, the British Pound (GBP) pulled back from session highs near 1.3550 against the US Dollar to around 1.3520, turning negative on the day. This retreat followed Bank of England Governor Andrew Bailey's call for flexibility on monetary policy, which cooled expectations for a rate hike at the upcoming BoE meeting. Bailey emphasized the need for central banks to preserve flexibility and not commit to a predetermined rate path [2].
Both articles highlight the market's focus on the upcoming US Nonfarm Payrolls (NFP) report, scheduled for release at 12:30 GMT on Friday. Consensus expectations are for the US economy to add 56,000 jobs in August, following a loss of 23,000 jobs in July. The Unemployment Rate is forecast to remain at 4.1%. Previous months' payrolls figures were revised down by a combined 103,000 in the last report. Analysts note that wage growth and any revisions to July's data will also be closely watched [1][2].
Analysts at OCBC remain constructive on gold but caution that its near-term trajectory is highly sensitive to Fed repricing, with the NFP report and next week's CPI and PPI data likely to be decisive in shaping expectations for future Fed policy. They also note that geopolitical tensions provide marginal support for gold, but higher oil prices could pose a risk if they feed into inflation expectations and yields [1].
Technical analysis shows XAU/USD holding above the 100-day Simple Moving Average (SMA) at around $4,354, with resistance near the 200-day SMA at $4,534. The price has reclaimed the 38.2% Fibonacci retracement at about $4,448, which now acts as immediate support [1].
CONCLUSION
Markets are in a holding pattern ahead of the US Nonfarm Payrolls report, with both gold and the US Dollar showing limited movement as traders await key economic data. The outcome of the NFP release, along with upcoming inflation figures, is expected to play a pivotal role in shaping expectations for future monetary policy decisions by the Federal Reserve. Near-term volatility is likely to be driven by these data releases and their impact on rate hike probabilities.