Gold Prices See Volatile Week Amid Stronger Than Expected US Payrolls

Gold prices saw a volatile week, marked by a sharp rebound midweek that was largely erased on Friday after stronger-than-expected US payrolls revived expectations for a September rate hike. Spot gold started the week at $4,439.15 per ounce and initially came under pressure as traders digested the prior week's selloff, elevated Treasury yields, and lingering inflation concerns tied to oil prices and the U.S.-Iran conflict.

The decline accelerated Tuesday with gold breaking below $4,300 overnight to set the weekly low of $4,282.61 per ounce before buyers emerged. Gold prices recovered Wednesday and rallied sharply on Thursday after softer private-sector labor data, easing Treasury yields, and less hawkish comments from Fed Governor Christopher Waller helped traders trim expectations for an imminent Fed hike.

The move carried spot prices back above $4,500, where gold set its weekly high at $4,511.08 per ounce on Thursday. However, the rebound failed Friday morning after the August nonfarm payrolls report showed the US economy added 162,000 jobs, well above expectations, while the unemployment rate held at 4.1%. The stronger labor market data pushed the US dollar and short-term Treasury yields higher, revived the Fed rate-hike trade, and sent gold sharply lower in the minutes after the release.

Kitco's Weekly Gold Survey showed Wall Street sentiment evenly divided between bulls, bears, and fence-sitters after gold's mercurial week. Main Street investors shaved down their bullish majority following another failed breakout. Next week's holiday-shortened economic news calendar will be focused on US inflation data, but market participants will also be watching key manufacturing and services sector surveys, along with two central bank rate announcements.