During the Asian trading session on Friday, the price of gold (XAU/USD) surged close to $2,450 per troy ounce as traders eagerly anticipated key US labor market data, including the Nonfarm Payrolls report and Average Hourly Earnings figures for July. Recent data on manufacturing and employment in the US has heightened apprehensions about the state of the economy, fostering risk aversion and bolstering demand for the safe-haven qualities of gold.
The US ISM Manufacturing Purchasing Managers Index (PMI) plummeted to an eight-month low of 46.8 in July, a stark contrast to the previous reading of 48.5 and expectations for a rise to 48.8. Additionally, US Initial Jobless Claims for the week ending July 26 climbed to 249K from the previous week’s 235K, surpassing the anticipated increase to 236K.
Escalating geopolitical tensions in the Middle East have further fueled the safe-haven appeal of gold. The region remains on edge following the assassination of Hamas leader Ismail Haniyeh in Iran.
According to a report by the New York Times on Wednesday, Haniyeh was assassinated in Iran’s capital after attending the inauguration of the new president. Both Iranian officials and Hamas have pointed fingers at Israel, accusing them of orchestrating the attack.
The price of gold has seen an upsurge due to the dovish sentiment surrounding the Federal Reserve’s policy direction. At its July meeting on Wednesday, the Fed chose to maintain interest rates within the 5.25%-5.50% range. Lower interest rates typically enhance the attractiveness of non-yielding assets like gold, further supporting its demand in the current market climate.
