Gold prices rebounded above $4,400 an ounce on Thursday, recovering from a sharp pullback earlier in the week, as softer US labor market data and easing Treasury yields provided relief for the precious metal. Spot gold climbed more than 1% to around $4,435 during late Asian trading, while US futures advanced about 1.5% to $4,480.
The rebound follows a drop to a near one-month low earlier this week, when rising oil prices and a renewed surge in bond yields revived expectations for another Federal Reserve rate increase. However, Wednesday's ADP private payrolls report showed US employers added just 38,000 jobs in August, below the 47,000 economists had expected, and July's figure was revised down to 44,000. This miss helped pull Treasury yields back from multi-year highs and weakened the dollar, both supportive for non-yielding gold.
The Fed's Beige Book, released Wednesday, also indicated only very slight employment growth across the economy, with prices increasing at a moderate pace in most districts. The report highlighted elevated energy, transport, and raw-material costs, suggesting the inflation picture remains uncomfortable even as hiring cools. That leaves bullion caught between two forces: weaker employment data reduce the case for aggressive tightening, but high energy costs keep inflation risks alive.
Payrolls now hold the September key
Friday's nonfarm-payrolls report has become the main event for gold traders. Economists expect roughly 50,000-55,000 jobs to have been added in August after payrolls fell by 23,000 in July. The unemployment rate is expected to remain around 4.1%. Markets still assign roughly a 60%-plus probability to a quarter-point Fed increase this month, but those odds have eased after Wednesday's weaker ADP reading.
Konstantinos Chrysikos of Kudo.com said that weaker payroll figures could reduce downside pressure on gold by pulling rate expectations lower. Stronger employment data or more hawkish Fed commentary would work in the opposite direction. For bullion, the relationship is straightforward: lower expected rates reduce the opportunity cost of holding gold, while higher yields and a stronger dollar generally work against it.
Technical rebound needs confirmation above $4,500
The recovery has also improved the short-term chart after gold held an important support zone. StoneX senior market analyst Matt Simpson told The Wall Street Journal that Comex gold could move towards $4,600 after prices found support around the 200-day exponential moving average and a key weekly volume level. He also sees signs that selling momentum is beginning to fade.
Kitco's latest technical work puts initial resistance around $4,422, followed by $4,487 and $4,573. On the downside, roughly $4,320 remains the first important support, with a deeper break exposing the $4,230 region. As investors await the payrolls data, gold's near-term direction will likely hinge on whether the labor market shows further signs of cooling, which could bolster the case for a pause in rate hikes and provide additional upside for the metal.
For broader market context, Asian equities rebounded as bond yields eased ahead of the US jobs report. Meanwhile, the ADP miss has already been factored into some asset prices, but the official payrolls figure could trigger fresh volatility across markets.
This article is for informational purposes only and does not constitute financial advice.
