Gold prices traded close to $4,500 an ounce on Friday, extending their recovery after gaining almost 2% in the previous session as investors awaited U.S. employment figures for further guidance on the Federal Reserve’s September policy decision.
The metal was supported by a weaker U.S. dollar and comments from Federal Reserve Governor Christopher Waller indicating that he could favour leaving interest rates unchanged if incoming data continue to show easing inflation. U.S. inflation figures due next week are also being monitored.
At 21:18 ET (01:18 GMT), XAU/USD gained 0.3% to $4,484.27 an ounce, while gold futures were trading at approximately $4,530. XAG/USD stood around $65.8 an ounce, with XPT/USD near $1,775. The U.S. Dollar Index was lower at approximately 99.4.
Fed Rate Expectations Shift Following Waller Remarks
Gold’s advance followed three consecutive sessions of declines before the metal rebounded by almost 2% on Thursday.
Waller indicated that he could favour keeping interest rates unchanged at the Federal Reserve’s September 15-16 meeting if forthcoming economic releases confirm that inflationary pressures are continuing to ease.
He said August inflation figures would play an important role in his decision, while retaining the possibility of supporting a rate increase if price pressures strengthen.
The implied probability of a September rate increase subsequently declined to approximately 50%, compared with around 70% earlier in the week.
Lower interest rates can affect demand for gold by reducing the relative yield advantage available from interest-bearing assets.
Currency movements were also in focus after the Japanese yen strengthened by nearly 2% against the dollar on Thursday. The move was the yen’s largest daily gain since Japanese and U.S. authorities intervened in foreign-exchange markets just over a month earlier.
U.S. Jobs Report Becomes Next Market Focus
Investors are now awaiting the U.S. nonfarm payrolls report for additional evidence on labour-market conditions and their potential implications for Federal Reserve policy.
Gold had fallen to approximately $4,282 an ounce earlier in the week, its lowest level in almost four weeks, before recovering.
Tony Sycamore, senior market analyst at IG, linked part of the subsequent recovery to easing pressure from energy prices, U.S. Treasury yields and the dollar, as well as indications that the latest escalation in the Middle East may have moderated. He also pointed to an improvement in risk sentiment.
Sycamore said the metal remained above its late-June low of $3,942, maintaining his medium-term assessment that gold had established a base around that level.
He added that the move below the 200-day moving average of approximately $4,526 during the previous week had affected the short-term technical outlook but had not altered his broader assessment.
Developments in the Middle East remain another factor for gold markets. Earlier fighting contributed to higher oil prices and inflation concerns, while a subsequent moderation in energy-price pressures has reduced some of that impact.
Leave a Reply