Gold (XAUUSD) continued to edge higher in the Asian session on Friday, holding firm above the $3,500 mark and staying within reach of its all-time peak. The yellow metal is drawing support from renewed weakness in the US Dollar, which has come under pressure amid growing market confidence that the Federal Reserve will cut interest rates twice before year-end with the first move expected this month.
The combination of dovish Fed expectations and ongoing trade-related uncertainties has boosted safe-haven demand for Gold. Even with a positive risk tone in global equities, investors remain cautious ahead of the US Nonfarm Payrolls (NFP) report, due later in the day. This labor market release could prove pivotal in shaping Fed policy expectations and, in turn, determining Gold’s near-term trajectory.
Fed Rate Cut Bets Drive Market Mood
A weaker-than-expected run of US labor market data has reinforced expectations of an imminent Fed pivot. Thursday’s ADP employment report showed that private-sector job creation slowed sharply to 54,000 in August, well below consensus forecasts of 65,000 and a steep drop from July’s revised 106,000 increase.
This soft reading was compounded by the latest jobless claims data, which showed an uptick in weekly unemployment filings to 237,000 higher than both market expectations and the prior week’s level. Together, these figures suggest that the labor market is cooling more quickly than the Fed initially anticipated, strengthening the case for pre-emptive rate cuts to cushion the economy.
While the ISM Services PMI offered a glimmer of strength by climbing back above 52, the broader trend still reflects subdued economic momentum. Traders remain firmly focused on the Fed’s balancing act between keeping inflation under control and addressing the risk of rising unemployment.
Trump’s Tariff Policy Adds to Uncertainty
Trade developments also continue to inject volatility into financial markets. On Thursday, US President Donald Trump signed an executive order formalizing reduced tariffs on Japanese automobile imports, a move that initially boosted sentiment.
However, the broader trade picture remains clouded. Trump has asked the Supreme Court to overturn an appeals court ruling that invalidated much of his tariff framework, creating fresh legal uncertainty around US trade policy. These unresolved issues add to the safe-haven appeal of Gold, especially as investors weigh the potential fallout for global supply chains and business sentiment.
Fed Officials Send Mixed Signals
Comments from Fed policymakers have done little to provide clarity. New York Fed President John Williams acknowledged the need to balance risks between inflation and employment, projecting GDP growth of just 1.25–1.5% for 2025 and warning that unemployment could rise to 4.5% next year. His remarks implied gradual rate cuts would be appropriate if current forecasts hold.
Meanwhile, Chicago Fed President Austan Goolsbee struck a more cautious tone, pointing to labor market deterioration and possible inflation upticks. He argued that interest rates are better labor indicators than raw job growth, signaling a wait-and-see approach.
Despite his hawkish undertones, the Dollar failed to recover, underscoring the market’s conviction that policy easing is imminent. For Gold, this divergence between Fed rhetoric and market pricing continues to provide strong support.
Spotlight on Nonfarm Payrolls
All eyes are now on the August NFP report, which is expected to show job gains of just 75,000 and an uptick in the unemployment rate to 4.3% from 4.2%. A significantly weaker print could push traders to price in more aggressive Fed easing, potentially fueling another leg higher in Gold.
Conversely, if the data surprises to the upside, markets may trim their rate-cut bets, leading to a temporary Dollar rebound and modest Gold correction. However, with inflation risks still present and geopolitical uncertainties unresolved, dips in Gold are likely to remain well-supported.
Technical Outlook: Bulls Hold the Advantage
From a technical perspective, Gold remains firmly in bullish territory. The $3,500 level has proven to be a reliable support zone, while resistance sits near the recent record peak just above $3,560. Momentum indicators suggest overbought conditions on short-term charts, which could trigger minor pullbacks.
That said, as long as Gold holds above the $3,480–$3,500 band, the broader uptrend remains intact. A decisive break above $3,560 would likely open the door toward the $3,600 psychological level. On the downside, sustained weakness below $3,480 could expose $3,450 as the next support.
Conclusion: Gold’s Rally Hinges on NFP
Gold remains underpinned by a confluence of dovish Fed bets, trade uncertainty, and safe-haven flows. With the Fed’s September decision looming, Friday’s NFP report carries outsized significance for both the Dollar and Gold.
If labor market weakness persists, Gold could surge to fresh record highs as investors anticipate deeper Fed easing. However, stronger data may cap the rally in the near term. Either way, the broader outlook for Gold remains bullish as long as global uncertainties and US policy risks linger.
