Gold's August NFP Bounce May Be Shallow Amid Stronger Labour Market

The gold market has surprised many traders by moving lower despite rising geopolitical tensions and historically supportive factors.

A stronger US labour market could reinforce expectations of higher interest rates, while a weaker one may ease pressure on the Federal Reserve. However, the recent decline in gold prices has been driven primarily by higher Treasury yields and a stronger dollar.

According to analysts, rate hike expectations have risen significantly, with around 66-70% expecting an increase in September. The 10-year Treasury yield has also climbed to near multi-year highs, increasing the opportunity cost of holding gold.