Gold prices rose 0.6% in global markets on Thursday. The increase came as the US dollar and Treasury yields declined, while investors waited for important US labor-market data.
After Asian markets opened, spot gold climbed 0.6% to around $4,430 per ounce. The metal had reached its lowest level in a month during the previous session.
Meanwhile, gold futures gained 0.9% and reached $4,455.30 per ounce.
The weaker US dollar helped support gold prices. In addition, lower Treasury yields made the precious metal more attractive to investors. A weaker dollar also makes gold cheaper for buyers who use other currencies.
Investors are now focusing on the US employment report due on Friday. The report will cover nonfarm employment and could influence expectations for the Federal Reserve’s next interest-rate decision.
Ilya Spivak, a financial markets specialist at Tastylive, said the jobs report represents the most important market event this week. He expects gold to gain further if the employment figures come in below market forecasts.
According to Spivak, weaker labor data could reduce expectations for a September interest-rate increase. As a result, gold could receive additional support.
He also identified important price levels for gold. If the metal breaks above $4,400, he expects prices to move toward $4,500 and potentially $4,700.
According to the CME FedWatch tool, markets currently see a 62% probability of a US interest-rate increase this month.
However, recent economic signals have created uncertainty around the Federal Reserve’s next move.
A Federal Reserve report released on Wednesday showed limited growth in economic activity and employment during recent weeks. Therefore, policymakers face a difficult decision ahead of their September 15–16 meeting.
The central bank must weigh inflation concerns against signs of slower economic and employment growth. Consequently, Friday’s jobs data could play an important role in shaping expectations for monetary policy.
For gold investors, the combination of a weaker dollar, lower Treasury yields, and softer labor data could provide further support.
However, stronger employment figures could increase expectations for higher interest rates. That scenario could put renewed pressure on gold prices.
Markets will therefore closely watch Friday’s report for clues about the Federal Reserve’s next decision and gold’s short-term direction.
