Initially, Gold prices rose following the NFP release on Friday, as the data revealed fewer job additions in August than anticipated, coupled with downward revisions for July and June’s figures. This suggested a weakening labor market and increased speculation that the Federal Reserve might opt for a larger 0.50% rate cut in September, which is generally favorable for Gold as it lowers the opportunity cost of holding non-yielding assets.
However, Gold’s gains were short-lived as traders digested the broader implications of the NFP report. The Unemployment Rate fell to 4.2% from the expected 4.3%, and wage growth surpassed forecasts, rising by 0.4% compared to the anticipated 0.3%. These factors indicated that the labor market might not be as weak as initially thought and that wage inflation was on the rise. Consequently, the likelihood of a 0.50% rate cut by the Fed dropped from about 40% to 30%.
Gold prices retraced, ending the week around $2,500 before dipping slightly into the $2,490s on Monday.
