Gold prices (XAU/USD) slipped from the $3,369 mark—a level last seen over a week ago—during Monday’s Asian session, pausing a steady recovery from last week’s one-month low. The retreat comes as the US Dollar regains modest footing at the start of the week, supported by a small rebound in Treasury yields. This limited appetite for the non-yielding precious metal in the short term.
Still, the downside in gold appears contained. Growing market consensus that the Federal Reserve will resume rate cuts in September, coupled with concerns over the Fed’s political independence and rising geopolitical tensions, continues to underpin safe-haven demand.
Labor Market Weakness Fuels Policy Shift Expectations
Friday’s US Nonfarm Payrolls report revealed just 73,000 jobs were added in July, far below the expected 110,000. Previous months also saw significant downward revisions—June’s tally slashed to 14,000 from 147,000. The unemployment rate edged higher to 4.2% from 4.1%, while labor force participation dipped slightly to 62.2%. Wage growth remained steady, with average hourly earnings rising to 3.9% from 3.8%.
The weaker labor market data reinforced speculation that the Fed will adopt a more accommodative stance in September, a scenario that typically supports gold by lowering the opportunity cost of holding the non-yielding asset.
Political Pressure on the Fed Raises Concerns
The jobs data fallout triggered immediate political moves. US President Donald Trump abruptly dismissed the Bureau of Labor Statistics head, Erike McEntarfer, accusing her of falsifying employment figures without presenting evidence. The resignation of Fed Governor Adriana Kugler soon after further fueled worries about mounting political interference in monetary policy—a development that could unsettle investors and indirectly support gold.
Geopolitical Tensions Add to Safe-Haven Appeal
Geopolitical risk is back in focus after Trump ordered the deployment of two nuclear submarines near Russia in response to inflammatory remarks by former Russian President Dmitry Medvedev. The move raises fears of fresh escalation in the ongoing Russia-Ukraine war, adding another layer of support to gold’s safe-haven status.
Market Focus Ahead
Traders now await the release of US Factory Orders data later on Monday, which will help gauge the health of the US economy. In the near term, gold’s direction will likely hinge on the interplay between Fed policy expectations, US economic data, and global geopolitical developments.
