Gold prices remained close to $4,500 an ounce on Friday after rising almost 2% in the previous session, as investors awaited U.S. nonfarm payrolls data for further indications about the Federal Reserve’s September interest-rate decision.
A weaker U.S. dollar and comments from Federal Reserve Governor Christopher Waller contributed to market expectations that rates could remain unchanged if inflation continues to moderate. Investors were also looking ahead to U.S. inflation data due next week.
At 21:18 ET (01:18 GMT), XAU/USD was up 0.3% at $4,484.27 an ounce, while gold futures traded around $4,530. XAG/USD was near $65.8 an ounce and XPT/USD was around $1,775. The U.S. Dollar Index declined to approximately 99.4.
Waller Comments Affect September Rate Expectations
Gold rebounded by almost 2% on Thursday, ending a three-session decline before extending its recovery on Friday.
Waller indicated that he could support keeping interest rates unchanged at the Federal Reserve’s September 15-16 meeting if forthcoming economic data confirm that inflation is continuing to ease.
He identified August inflation data as an important factor in his decision while leaving open the possibility of supporting a rate increase if price pressures strengthen again.
Market expectations for a September rate increase subsequently declined, with the implied probability falling to around 50% from approximately 70% earlier in the week.
Lower interest rates can reduce the relative yield advantage of interest-bearing assets compared with gold, which does not generate interest.
The U.S. dollar also weakened as the Japanese yen gained nearly 2% on Thursday, recording its largest daily advance since Japanese and U.S. authorities intervened in currency markets just over a month earlier.
Payrolls and Technical Levels in Focus
The U.S. nonfarm payrolls report is the next economic release being monitored for its potential implications for monetary policy.
Gold’s latest recovery followed a decline earlier in the week that took the metal to around $4,282 an ounce, its lowest level in almost four weeks.
Tony Sycamore, senior market analyst at IG, attributed part of the subsequent move to reduced pressure from energy prices, U.S. Treasury yields and the dollar, alongside indications that the latest escalation in the Middle East may have moderated. He also cited an improvement in risk sentiment.
Sycamore said gold remained above its late-June low of $3,942, which continued to support his medium-term assessment that the metal had established a base around that level.
He also noted that gold’s move below its 200-day moving average of approximately $4,526 during the previous week had affected the short-term technical picture but had not changed his broader assessment.
Gold remains sensitive to developments in the Middle East, where earlier fighting contributed to higher oil prices and renewed inflation concerns. More recently, easing energy-price pressures have reduced some of that influence.