Gold prices lifted modestly during Friday’s Asian session as the United States dollar was weighed by renewed concerns over President Donald Trump’s expansive tax and spending bill.
Thin market conditions due to the U.S. Independence Day holiday also contributed to the metal’s gains.
By 3:30 pm AEST (5:30 am GMT), spot gold was up US$13.20, or 0.4%, to US$3,339.63 per ounce.
The greenback had staged a recovery following Thursday’s stronger-than-expected labour data, but sentiment turned cautious as attention shifted back to growing fiscal risks and trade uncertainty.
The U.S. House of Representatives, controlled by Republicans, narrowly approved President Trump’s sweeping tax-cut and spending bill on Thursday.
According to the Congressional Budget Office, the legislation would add US$3.4 trillion to the national debt, which currently stands at $36.2 trillion. Concerns over rising fiscal imbalances are now acting as a drag on the U.S. dollar, offering support to gold, which is priced in the currency.
Traders are also eyeing the approaching July 9 deadline for the expiration of Trump’s 90-day tariff pause. The president has signalled he expects several trade deals to be reached before then, but a lack of clarity is fuelling uncertainty in global markets.
Gold had pulled back on Thursday after hitting fresh weekly highs, as a robust U.S. labour market report dampened expectations for aggressive interest rate cuts by the Federal Reserve.
The Bureau of Labor Statistics reported that nonfarm payrolls rose by 147,000 in June, beating estimates for a 110,000 increase. May’s reading was also revised upward to 144,000.
Meanwhile, the unemployment rate unexpectedly fell to 4.1%, down from May’s 4.2% and below forecasts for an increase to 4.3%.
These figures tempered speculation that the Fed might begin cutting rates imminently. According to the CME Group FedWatch Tool, markets are now pricing in a 65.9% probability of a rate cut in September - down from 72% prior to the jobs data - while expectations for a July cut have fallen to 5.2%.
