Gold Rebounds Strongly as Fed Rate Outlook Is Reassessed Amid Weak Labor Data

Gold climbed to $4,177 per troy ounce on Friday, marking a gain of over 2% from the previous day. This rebound was spurred by US labor market data that came in weaker than anticipated, causing investors to temper expectations for additional Federal Reserve rate hikes.

In June, the US economy added only 57,000 jobs, markedly below the 110,000 forecast and the weakest gain in four months. The unemployment rate edged up to 4.2%, and the ADP report earlier in the week also indicated a slowdown in private‑sector job growth.

After the data were released, the likelihood of a September Fed rate hike fell to around 50%, compared with 67% beforehand. The market also received support from Federal Reserve Chair Kevin Warsh, who highlighted easing inflation expectations while reaffirming the central bank’s commitment to price stability.

Lower inflation risks continue to bolster gold’s appeal. The resumption of commercial shipping through the Strait of Hormuz and advances in US‑Iran negotiations have contributed to a further drop in oil prices, reinforcing bullish sentiment toward precious metals.

Technical Analysis

On the H4 XAU/USD chart, price is consolidating around $4,038 and has risen to $4,190. A subsequent decline toward $3,929 is expected, after which a rebound to $4,170 could occur, potentially extending toward $4,400. The MACD indicator points to weakening upward momentum, with its signal line above the centreline yet trending sharply downward.

On the H1 chart, the market broke above the 4,141 USD level and moved higher to 4,190 USD. A decline towards 3,929 USD may follow, with a broad consolidation range forming around 4,060 USD. The Stochastic oscillator supports this scenario, with its signal line below 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.

Conclusion

Gold has posted a sharp rebound after US labor data came in weaker than expected, sharply reducing forecasts for further Fed rate hikes. The economy added only 57,000 jobs in June versus a 110,000 forecast, while unemployment edged up to 4.2%, underscoring a cooling labor market. Fed Chair Warsh’s remarks on easing inflation expectations have reinforced the case for a more cautious rate policy. Simultaneously, progress in US‑Iran talks and the restart of commercial traffic through the Strait of Hormuz have pushed oil prices lower, bolstering gold’s appeal. Technically, the metal is set for a modest pullback toward $3,929 before potentially resuming its upward trajectory.

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