Gold prices came under pressure following the release of stronger-than-expected U.S. labor market data. The price briefly dipped to just over $2,630 per troy ounce before partially recovering, according to Commerzbank commodity analyst Carsten Fritsch.
Gold Demand Driven by Uncertainty Amid Middle East Tensions
The U.S. labor market report for September revealed a significant increase in job creation, with revisions to the previous two months also showing higher numbers. Additionally, the unemployment rate dropped, and average hourly earnings saw a sharp rise. These factors led to a rapid recalibration of expectations for Federal Reserve rate cuts.
Market participants, as reflected by Fed fund futures, now anticipate a 25 basis point rate cut in both November and December—half of what was previously expected. This aligns with the Fed’s stance and forecasts by Commerzbank economists. Despite the stronger labor data, which typically pressures gold, the metal’s price did not drop sharply, likely due to escalating tensions between Israel and Iran. This geopolitical uncertainty has bolstered gold’s safe-haven appeal.
Supporting this trend, gold-backed ETFs saw inflows of nearly nine tons since last Wednesday, highlighting the continued demand for gold amid global instability. However, opposing forces are at play. Thursday’s U.S. inflation data is expected to show a decline in price pressure but is unlikely to reignite expectations of more aggressive Fed rate cuts. Moving forward, gold’s trajectory will likely be influenced more by geopolitical risks than economic data.
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