Gold surged back above $4,450 to trade around $4,470 in early Asian trading Friday, extending its recovery as expectations for Federal Reserve interest rate hikes cooled. The rally follows comments from Fed Governor Christopher Waller that appeared to temper market expectations for aggressive monetary tightening, providing relief to non-yielding assets like gold.
Traders, brokers, and institutional investors are now laser-focused on the US August Nonfarm Payrolls report due later Friday, which could significantly impact both gold positioning and Fed policy expectations. A stronger-than-expected jobs number could reignite rate hike speculation and pressure gold lower, while weak employment data would likely reinforce the current rebound in precious metals.
The gold-dollar inverse relationship remains critical as market participants reassess Fed trajectory ahead of this key employment release. Volatility is expected to spike across forex and commodity markets when NFP data hits.
FXnCO Insight
Position for elevated volatility in gold and dollar pairs around the NFP release, with downside risk to gold if employment data surprises to the upside.
Source: FXStreet