Gold Rebounds from Selloff as Market Awaits Crucial Inflation Data

The US Labor Department released employment data showing 162,000 jobs were created in August, exceeding economists' expectations of around 55,000. The strong numbers caused a selloff in gold prices, which fell by over $100 within the first 30 minutes after the report.

However, gold managed to push back above a critical support level and last traded at $4,423.10 an ounce, down less than 1% on the week. Analysts note that this selloff was not surprising, as a relatively healthy labor market gives the Federal Reserve room to focus on price stability.

Next week's inflation data will be crucial for the Fed and could provide momentum for gold. Some analysts believe that if the Consumer Price Index (CPI) shows muted inflation, the Fed may leave rates unchanged. However, others think that even a moderate rate hike could still have an impact on gold prices.

David Morrison, Senior Market Analyst at Trade Nation, said that although gold's selloff has created some technical chart damage, it remains difficult to ignore the broader long-term factors supporting gold. He noted that the daily MACD suggests momentum is currently to the downside, but a retest of $4,200 can't be ruled out.