Gold prices remained steady on Friday, staying near record levels as investors awaited the release of the U.S. Non-Farm Payrolls (NFP) report. The data is expected to offer critical insight into the Federal Reserve’s next steps on interest rates. If job growth slows more than expected, gold prices could break past $2,882, while stronger employment figures might push gold toward key support at $2,807.
Gold Prices Near Record Highs
Gold (XAU/USD) edged higher, reaching $2,867.04 at 12:04 GMT, up 0.39%. The metal continues its strong uptrend, with traders focused on the previous peak of $2,882. If bullish momentum persists, new records could be set. However, failure to maintain gains could trigger selling pressure, potentially pulling gold back to support levels at $2,807 or $2,772.
Despite minor fluctuations, the broader sentiment remains positive, with investors taking a “buy the dip” approach. This suggests confidence in gold’s long-term strength, reducing the likelihood of a sharp reversal. The market’s direction will largely depend on the upcoming jobs report.
U.S. Jobs Report: A Critical Factor for Gold’s Direction
The U.S. NFP report is anticipated to show job growth of 169,000, a significant slowdown from December’s 256,000. The unemployment rate is expected to hold steady at 4.1%, with wage growth forecast to ease to a 0.3% monthly increase and a 3.7% annual rise.
A weaker-than-expected report could lead to expectations of early Federal Reserve rate cuts, which would boost gold prices. Conversely, strong job numbers might prompt the Fed to maintain a cautious stance, resulting in higher bond yields and a stronger U.S. dollar—both of which could weigh on gold prices.
Tariffs on China Boost Gold’s Safe-Haven Demand
The U.S. government’s new tariff policies on China have added to market uncertainty, enhancing gold’s status as a safe-haven asset. Investors are closely monitoring the impact of these trade tensions on global economic growth.
Chicago Fed President Austan Goolsbee acknowledged that while economic resilience may allow for potential rate cuts, ongoing trade risks could force the Fed to act sooner. Any signs of economic slowdown, coupled with trade instability, could further boost demand for gold.
Physical Gold Demand Weakens in India and China
Despite strong global performance, physical gold demand in major consumer markets like India and China remains weak due to high prices. Retail buyers have been deterred by the elevated costs, as reflected in the Perth Mint’s report of its lowest gold sales in ten months.
Silver sales also took a hit, dropping by 61% from the previous month. This suggests that while investment demand remains robust, traditional buyers in jewelry and retail sectors are holding back due to record-high prices.
Market Outlook: Will Gold Reach New Heights?
Gold’s next move hinges on the U.S. jobs report. If the data reveals slower job growth or rising unemployment, expectations of earlier Fed rate cuts could drive gold prices above $2,882, potentially setting new all-time highs as investors flock to safe-haven assets.
However, if the labor market remains strong and wage growth stays stable, the Fed might delay rate cuts, strengthening the U.S. dollar and Treasury yields. This scenario could limit gold’s upside, with prices possibly facing resistance around $2,807 or $2,772.
Gold prices are supported by economic uncertainty and Fed policy expectations. The upcoming U.S. jobs report will be pivotal in determining the metal’s next direction. Slower job growth could accelerate gold’s bullish momentum, while strong employment numbers might temper its upside. Traders and investors should monitor economic indicators closely to gauge market trends in the coming weeks.
Conclusion
Gold prices remain near record highs, with the U.S. jobs report playing a crucial role in its next move. Weaker-than-expected job growth could push gold higher as traders anticipate rate cuts from the Federal Reserve, while stronger employment data may limit gold’s upside, as the Fed could hold off on easing.
Despite weaker physical demand in key markets like India and China, gold’s safe-haven appeal continues to support prices. Central bank buying also provides price support.
Ultimately, gold’s direction will depend on the U.S. jobs data. A slowdown could push prices higher, while a strong labor market may limit the rally. Traders should stay alert to upcoming data to adjust their strategies.