US Labor Market Weighs on Dollar as Gold Surges Amid Tensions

The US labor market report for July showed weaker-than-expected numbers, with ADP private payrolls rising by just 44K, short of the 70K forecast. This was a sharp deceleration from the previous month's print of 98K.

The ISM Services PMI came in at 54.1 against expectations of 54.5. The employment sub-index told an even more troubling story, collapsing to 47.4 from 51.2.

Gold surged over 4% to trade near $4,247 per troy ounce as a result, while the US Dollar Index (DXY) eased around 0.16%. The DXY has been trading in a narrow range for the last four days, amid a de-escalation in the US-Iran war with both countries close to resuming peace talks.

The Strait of Hormuz situation is still uncertain, but Reuters reported that Iran and Oman are in the final stages of drafting an agreement on commercial shipping through the strait. This would hand Tehran greater control over transiting vessels.