Gold declines to near $4,400 as robust US jobs data lifts Fed hike odds
- Gold price tumbles to around $4,410 in Tuesday’s early Asian session.
- Traders price in a 60% probability of a Fed rate hike next week.
- US PPI and CPI inflation data will be in the spotlight this week.
Gold price (XAU/USD) drifts lower to near $4,410 during the early Asian session on Tuesday. The precious metal extends the decline as a stronger-than-expected US Nonfarm Payrolls (NFP) report for August bolsters expectations for a Federal Reserve (Fed) interest rate hike this month.
Data last week showed that US NFP climbed by 162K in August, versus an upwardly revised rise of 21K prior, above the market consensus of 56K. Meanwhile, the Unemployment Rate in the US held steady at 4.1% during the same period.
Traders see a 60% odds of an interest rate hike at the Fed's policy meeting next week, compared with a probability of 50% before the jobs data was released on Friday, according to the CME FedWatch tool.
"Gold and silver have moved in the opposite direction to energy prices, extending their declines after Friday’s strong U.S. jobs report lifted bond yields and reinforced expectations of a Fed rate hike on 16 September," said Ole Hansen, head of commodity strategy at Saxo Bank.
Traders will take more cues from the US Producer Price Index (PPI) and Consumer Price Index (CPI) inflation data later this week. Any signs of hotter inflation in the US would reinforce a September hike. This, in turn, could underpin the US Dollar (USD) and weigh on the USD-denominated commodity price. A cooler reading would strengthen the case for a rate hold and drag the Greenback lower.
Gold slips on US data even as structural bull run deepens
Analysts at Societe Generale argue that Gold has now “entered a new phase of its 2026 bull run,” one they characterise as being “defined less by speculative momentum and more by broad-based, structural conviction across every category of market participant.” What initially “began as a geopolitical shock” has, in their view, “evolved over the following months into something far more durable: a synchronised build-up of physical, futures, and options exposure that now spans retail investors, professional money managers, and derivatives traders alike.”
At the same time, strategists at UOB Group highlight that near-term price action remains sensitive to macro data, noting that Gold “fell more than 0.9% last Fri to $4429.98/oz for a weekly loss after stronger-than-expected US jobs data boosted expectations that the Fed could raise interest rates as soon as this month, denting the non-yielding bullion’s appeal.”
Technical Analysis: Gold price retains a neutral tone in the near term
In the daily chart, XAU/USD sits between the 100-day Simple Moving Average (SMA) and the 20-day SMA, leaving the metal supported by the longer-term average but capped by the shorter-term trend line overhead. The latest Bollinger Bands (20, 2) show spot holding comfortably above the lower band while failing to challenge the upper band, reinforcing a mid-range consolidation tone. The Relative Strength Index (14) around 51 is neutral, hinting at balanced momentum rather than a clear directional push.
On the topside, immediate resistance aligns with the 20-day SMA and Bollinger middle band near $4,465, with a subsequent barrier at the upper Bollinger band around $4,675 if buyers regain control. On the downside, initial support is seen at the 100-day SMA near $4,350, ahead of stronger demand into the lower Bollinger band around $4,260, where a break would open the door to a deeper corrective phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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