Gold Gains on Weak US Jobs Data but Faces Rate Hike Uncertainty
Gold prices climbed to near $4,160 during early Asian trading on Monday, recovering from recent losses as weaker-than-expected US Nonfarm Payrolls (NFP) data weighed on the US Dollar. The September NFP report showed a rise of just 29,000 jobs, far below expectations of 90,000, leading traders to reduce bets on further Federal Reserve rate hikes. Market expectations for a rate hike this month dropped to 22.1% from around 70% earlier in the week.
The softer jobs data has shifted investor sentiment, but rising oil prices due to US-Iran tensions could reignite inflation concerns, potentially limiting gold's upside. Analysts at UOB Group noted that gold eased to $4,156 per ounce as elevated real yields capped its gains, despite softer US Personal Consumption Expenditures (PCE) data.
Fed official Christopher Logan struck a hawkish tone, boosting expectations for additional rate hikes and supporting the US Dollar. The FXS Fed Sentiment Index rose to 136.59, reinforcing the outlook for tighter monetary policy. Technical analysis suggests gold remains in a bearish near-term bias, with key support at $4,102.30 and resistance around $4,275.
While gold's safe-haven appeal and inflation hedge properties remain, its performance is closely tied to interest rate expectations and the strength of the US Dollar. The metal's recent volatility highlights the delicate balance between economic data, geopolitical risks, and central bank policy.