Gold rises 5% this week, eyes on US jobs data for potential move to $4,600

Gold pushes higher as oil declines ease inflation fears

Spot gold traded around $4,262.39 an ounce in early Friday trading, up approximately 0.6%, bringing its weekly gain to more than 5% after touching its highest level in seven weeks on Thursday. US gold futures also posted gains, rising 0.5% to $4,321.50 an ounce.

The latest upward move has taken gold well above the $4,000 mark, which previously served as a consolidation area. Investors, however, are waiting for the US non-farm payrolls report, widely regarded as a major short-term catalyst for the metal’s direction.

Much of gold’s rebound is tied to the retreat in energy prices that had surged earlier amid tensions in the Middle East. While Brent crude oil rebounded about 1% to $83.38 a barrel on Friday, it remained on course for a weekly drop of roughly 7.5%.

Recent declines in oil prices have eased the threat of fresh inflation shocks and reduced pressure on central banks to tighten monetary policy, making gold more attractive during this period of softer rate expectations.

StoneX, a commodities brokerage and financial services company, has market analyst Matt Simpson attributing gold’s breakout above $4,000 to calming Middle East risks and a drop in energy costs. Simpson noted that the metal is showing early signs of a broader technical recovery.

Still, the global backdrop remains unstable. Renewed attacks by Houthi forces and indications that Iran may restrict certain vessels through the Strait of Hormuz have raised the risk of an oil rebound, which could quickly revive inflationary pressures and weigh on gold’s gains.

Mini dictionary: StoneX is a global financial services and brokerage firm known for commodity trading, risk management, and market analysis.

US payrolls in focus as market debate intensifies

Attention now shifts to the July US employment report from the Bureau of Labor Statistics, scheduled for release at 8:30 am New York time on Friday. Economists expect payrolls to have expanded by about 80,000 jobs, following an increase of 57,000 in June, with the unemployment rate projected to hold steady at 4.2%.

Market participants are split on the Federal Reserve’s next move. The probability of a September rate hike has fallen to roughly 55%, down from about 63% a week earlier. A softer jobs report could trigger lower Treasury yields, easing expectations of further policy tightening, while a strong print may strengthen the case for keeping rates higher.

Analysts such as Joseph Dahrieh of Tickmill see the latest labor data as a central catalyst for near-term gold prices. Weaker employment numbers could reinforce market bets on a less aggressive Fed, helping bullion, while robust figures might buoy the US dollar and limit gold’s rally.

Fed policy and technical milestones shape gold’s outlook

Despite recent gains, the Federal Reserve remains a major influence for gold’s longer-term prospects. St Louis Federal Reserve President Alberto Musalem recently stated that the central bank should have increased interest rates by 25 basis points at its July meeting to avoid larger, more disruptive hikes if inflation persists.

This underlines the significance of Friday’s labor data. Gold’s continued strength depends on whether economic indicators allow bond yields to decline without reigniting fears of persistent inflation.

Technically, analyst Matt Simpson considers the $4,000 level as a new support for gold, with the potential for prices to recover toward $4,600 if buyers maintain momentum on price dips. However, a surprisingly strong payrolls report could quickly challenge this scenario.

Silver and platinum also logged gains heading into the weekend, while palladium slipped slightly in the day’s session.