Gold Prices Hang in Balance Ahead of Crucial Employment Report

Gold's recent rally was short-lived as the US Federal Reserve rate-hike risk remains elevated. The 30-year US government bond yield broke above 5.20%, killing the gold rally before it had a second day. Despite pushing above $4,100 on Thursday due to a dollar break and a stable long end, gold failed to hold its ground by Friday.

The weekly employment report is set for release this Friday at 13:30 GMT, which will determine whether the rate hike odds tighten or loosen in September. A soft jobs report with weak wages could pull the rate-hike odds lower and restart dollar selling, potentially lifting gold prices above $4,100 again. However, a firm jobs report with strong wages would give inflation hawks a strong argument, leaving gold without a defense.

The JOLTS report on Tuesday is seen as an early indicator of the employment data. A soft reading could give gold buyers a head start in pressuring the dollar before Friday's main event. Conversely, a strong JOLTS report would signal a rate rebuild and potentially lead to gold defending its recent lows.