Gold Holds Firm as Fed Faces Pressure from Labor Data
Gold prices remained stable around US$4,345 per troy ounce during Monday morning trading, following their largest weekly gain since January. Throughout the previous week, gold surged more than 7% as US labor data revealed greater-than-expected weakness.
Nonfarm Payrolls data showed a decline in US employment for July, while figures for the preceding two months were also revised downward. These conditions reinforced the view that the labor market is losing momentum, leading investors to scale back expectations for near-term Federal Reserve interest rate hikes.
The weak labor data also weighed on the US dollar. The dollar index fell approximately 0.4% following the release of the NFP report on Friday, making dollar-denominated gold cheaper for buyers outside the US—a factor that helped sustain high gold prices.
Buying interest from major investors was also evident. Hedge funds and investment managers increased their bullish positions on gold to their highest levels in over six months. In China, gold-backed ETFs saw renewed inflows, while the central bank added 640,000 ounces to its gold reserves in July, marking its twenty-first consecutive month of purchases.
However, geopolitical risks remain a concern. Iran and Oman have yet to reach a final agreement regarding the reopening of the Strait of Hormuz, while the Iran-backed Houthi group claimed to have attacked Saudi oil facilities near the Red Sea. Such developments could drive up energy prices and reignite inflation fears.
Newsmaker Analysis: Gold retains bullish momentum after holding above US$4,300, supported by a weakening US labor market, reduced expectations for rate hikes, and institutional buying. Nevertheless, rising oil prices stemming from Middle East conflicts remain a risk, as they could revive inflationary pressures and prompt the Fed to reconsider a more hawkish policy stance. (asd)*
Source: Newsmaker.id
