Gold reached a new record high on Friday following a weak NFP report that heightened expectations of a dovish shift by the Federal Reserve. T
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he US added 114K jobs in July, falling short of the 175K anticipated. Meanwhile, the unemployment rate rose to its highest level since 2021.
These factors raised concerns about the Fed’s ability to achieve a soft landing. Consequently, market participants are leaning towards a 50 basis point rate cut by the Federal Reserve in September, which is driving gold prices higher due to the expectations of a more aggressive decline in interest rates.
Looking ahead, the market is anticipating Monday’s ISM Services PMI report, which is expected to rise to 51 points for June, up from 48.8 points in July. If the PMI increases as expected, it could ease investors’ concerns about the current economic conditions, potentially impacting gold prices, decelerating the current rally.
Meanwhile, escalating geopolitical tensions, particularly the looming threat of an all-out conflict in the Middle East, could continue to bolster gold’s status as a safe-haven asset.
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