Gold prices are clinging to gains ahead of the release of the August US Nonfarm Payrolls (NFP) data. The precious metal is trading around $4,470, following a jump on Thursday, as traders have scaled back their expectations for a Federal Reserve interest rate hike in September. This shift in sentiment was largely influenced by comments from Fed Governor Christopher Waller, who expressed confidence in decelerating price pressures.
Waller indicated that he would be inclined to support keeping policy rates steady at the September meeting if August Consumer Price Index (CPI) data confirms a cooling of inflation. As a result, the odds of a Fed rate hike in September, according to the CME FedWatch Tool, have decreased to approximately 50% from 63.2% just a couple of days prior. This reduction in hawkish Fed bets has made non-yielding gold more attractive, leading to its recent rebound from its lowest point since August 7.
Investors are now keenly awaiting the US NFP data, which is expected to significantly influence the Fed's monetary policy outlook. Ahead of this, the US ADP Employment Change data for August showed a weaker-than-expected increase of 38K in private payrolls, the slowest pace since February. Despite this, TD Securities anticipates a rebound in the official NFP report to 95K, following a decline of 23K in July, while expecting the unemployment rate to remain around 4.1%. The official labor market report is crucial for determining the next move in gold prices, as a strong report could re-ignite rate hike speculation, while weaker data could further support gold.
