Gold prices steadied on Friday after a sharp rally, with traders turning their focus to US payrolls data for clues on the Federal Reserve’s next interest rate decision. Spot gold held at $4,469.26 per ounce as of 0633 GMT, following a 2 per cent jump on Thursday. That move came after Federal Reserve Governor Christopher Waller indicated he would support leaving rates unchanged if inflation data continued to moderate.
Rate expectations shift after Waller comments
Waller’s remarks prompted traders to scale back expectations for a September rate hike. According to the CME FedWatch Tool, markets now price in roughly a 50 per cent chance of a rate increase later this month. Gold, which pays no interest, tends to benefit when the prospect of higher rates recedes.
Ross Maxwell, global strategy operations lead at VT Markets, noted that weak payrolls figures and a rise in unemployment could weaken the case for a rate hike. “In this case, gold could recover,” he said. However, he added that the metal could remain exposed to changing sentiment, with inflation data releases due next week.
Central bank demand and labour market data
Maxwell also pointed to ongoing central bank demand as a supportive factor. “The market continues to benefit from central bank demand, which could limit the extent of any decline,” he said.
Data on Thursday showed that the number of Americans filing new claims for unemployment benefits rose marginally last week, though layoffs remained low. That points to stable labour market conditions, which could influence the Fed’s thinking.
Geopolitical backdrop and other metals
Meanwhile, US Vice President JD Vance said the fighting between Washington and Tehran was not a war and declined to provide a timeline for when the conflict would end. The hostilities are now in their seventh month, with mid-term elections approaching. Such geopolitical uncertainty can support safe-haven demand for gold.
Among other precious metals, spot silver fell 0.5 per cent to $66.59 per ounce. Platinum lost 1.2 per cent to $1,803.53, and palladium declined nearly 1.3 per cent to $1,403.03. Both platinum and palladium were on track for slight weekly declines.
Key takeaways
- Spot gold held at $4,469.26 on Friday after a 2% rally on Thursday.
- Fed Governor Waller signalled openness to holding rates steady if inflation moderates, reducing rate-hike expectations.
- US payrolls data due Friday is the next major catalyst for gold price direction.
- Central bank demand continues to provide a floor for prices, according to analysts.
Common questions
Why did gold jump on Thursday?
Gold rose 2 per cent after Federal Reserve Governor Christopher Waller said he would support leaving interest rates unchanged if inflation data continued to show moderating pressures. That reduced expectations for a September rate hike.
What is the significance of US payrolls data for gold?
Payrolls data gives clues about the health of the labour market and the likelihood of further Fed rate hikes. Weak figures could reduce the case for a rate increase, which tends to support gold prices.
How does central bank demand affect gold prices?
Central banks buy gold as part of their reserve management. Sustained demand from central banks can help limit price declines during periods of selling pressure.
For the latest price movements, check the live gold price.
Gold’s direction in the near term will depend on Friday’s payrolls report and next week’s inflation data. The metal remains sensitive to shifts in rate expectations, but central bank buying continues to provide underlying support.