Gold prices took a brief pause on Monday following a rally on Friday after disappointing United States labour market data caused investors to reassess the economic outlook and await further clarity on interest rates and trade policy.
By 3:10 pm AEST (5:10 am GMT), spot gold was down $3.18 or 0.1% to US$3,359.72 per ounce.
The precious metal had surged in the previous sessions following the release of weaker-than-expected nonfarm payrolls (NFP) data for July.
The Bureau of Labour Statistics reported that the U.S. economy added only 73,000 jobs last month, well below the consensus estimate of 110,000.
While that was higher than June’s sharply revised total of 14,000, the figures raised fresh doubts about the durability of the U.S. economic recovery.
The unemployment rate ticked up to 4.2%, in line with forecasts.
The lacklustre jobs data intensified fears that the Federal Reserve may soon need to act to support growth.
Prior to the release, markets had priced in a roughly 50% chance of a rate cut in September. That probability jumped to around 80% following the report, according to the CME Group FedWatch Tool.
Treasury yields tumbled across maturities, while the U.S. dollar came under renewed selling pressure, fuelling the rally in gold as investors sought safer assets.
Compounding the volatility was President Donald Trump’s decision to fire the Commissioner of Labour Statistics, Erika McEntarfer, in the wake of the jobs report.
The abrupt dismissal of the department’s top statistician sparked speculation that the White House may be attempting to cast doubt on the credibility of official data, with potential implications for inflation reporting and the Federal Reserve’s policy independence.
While the U.S. dollar attempted a modest rebound in early Monday trade, broader sentiment remains fragile amid concerns about Trump’s escalating trade policies and their potential to further dampen growth.
Gold may remain well supported in the near term as traders continue to digest the economic risks and assess the likelihood of a shift in Fed policy.
Also in focus this week are developments around U.S.-Canada trade talks, which could further influence market direction.
