Gold prices slipped during the North American session due to thin trading volumes, with US markets closed for Labor Day. The XAU/USD pair was trading at $2,499, marking a decrease of 0.14%. Meanwhile, the US Dollar (USD) remained strong as traders anticipated a critical jobs report that could impact the Federal Reserve’s decision regarding the size of its September rate cut.
This week’s US economic calendar is packed with key releases, including the Institute for Supply Management’s (ISM) Manufacturing and Services PMIs, JOLTS job openings, ADP National Employment Change, and Nonfarm Payrolls (NFP) data.
Federal Reserve Chairman Jerome Powell, speaking at Jackson Hole, highlighted that inflation risks are skewed to the downside, while employment risks lean to the upside. Last Friday’s Core Personal Consumption Expenditures Price Index (PCE), the Fed‘s favored inflation gauge, remained steady at around 2.5%, indicating controlled inflation. However, recent NFP reports have shown a rise in the Unemployment Rate from 3.8% to 4.3%, raising concerns among Fed officials about a potentially cooling labor market.
These concerns about a possible recession had diminished following robust US economic data, including a drop in Initial Jobless Claims, a sharp rise in Retail Sales, and a 3% growth in the second quarter’s Gross Domestic Product (GDP). As a result, investors turned to the US Dollar, leading to a drop in gold prices.
Geopolitical tensions also persist, with President Biden reportedly preparing to present a final proposal for a hostage release and ceasefire deal between Israel and Hamas later this week, according to Axios sources.
