Gold Breaks $4,300; NFP Looms as Final Test
Gold prices surged more than 1% during Friday's trading (Aug 7), breaking back above the US$4,300 per troy ounce level. Spot gold rose approximately 1.6% to US$4,308.92, while US gold futures strengthened to US$4,367.90. For the week, gold has gained over 6.6%, heading toward its largest weekly rise since January.
Gold's rally was primarily driven by diminishing expectations of a Federal Reserve interest rate hike. The probability of a rate hike in September now stands at around 55%, down from 67% the previous week. The market is also beginning to assess that Fed Chair Kevin Warsh may not be as hawkish as previously anticipated.
Gold sentiment was further bolstered by a decline in oil prices throughout the week. US President Donald Trump stated that the conflict with Iran would likely end soon. If tensions ease and energy prices fall, inflationary pressure could subside, thereby reducing the Fed's need to raise interest rates again.
However, the market's primary focus is now on the US Nonfarm Payrolls (NFP) report. Strong labor data could revive the likelihood of a rate hike, pushing the dollar and bond yields higher while triggering profit-taking in gold.
On the other hand, gold's long-term outlook remains supported. UBS projects that gold prices could reach US$5,000 per troy ounce in the first half of 2027. Other precious metals also strengthened, with silver surging about 4.5%, platinum rising 2.4%, and palladium gaining 2.3%.
Newsmaker Analysis: Gold's momentum remains strong after successfully breaking back above US$4,300. If the NFP comes in weaker than expected and wage growth slows, gold has the potential to extend its gains. Conversely, a strong NFP could trigger a correction following the week's rally of over 6%.
Source: Newsmaker.id
