Gold Hits Record High as Weak NFP Fuels Fed Rate Cut Bets

Commodity

Summary:

Gold (XAU/USD) surged to an all-time high of $3,600 after disappointing US Nonfarm Payrolls reinforced expectations of Fed rate cuts. Falling Treasury yields and a weaker dollar supported the rally, while traders now shift focus to this week’s CPI data.

Fundamental Analysis

The price of gold surged on last Friday as weak labor market data fueled speculation that the Fed is preparing to pivot toward monetary easing. US Nonfarm Payrolls came in softer than expected, with the unemployment rate ticking higher and average hourly earnings stagnating. This signaled that cracks are beginning to emerge in what has so far been considered a resilient labor market.

The bond market reacted aggressively, Treasury yields tumbled across the curve, with the 2-year yield falling more than 11 basis points to 3.48%, its steepest decline in weeks. Falling yields reduced the opportunity cost of holding non-yielding assets like gold, which further lifted demand for the metal.

Meanwhile, the US Dollar Index (DXY) fell 0.70% to 97.37, weighed down by declining yields and heightened risk aversion. Traders also priced in political risk after President Trump’s attempt to dismiss Fed Governor Lisa Cook sparked renewed concerns over the central bank’s independence. Such developments reinforced safe-haven demand, creating additional upward pressure on bullion.

Looking ahead, markets are now fixated on this week’s Consumer Price Index (CPI) report. If inflation continues to ease, it will likely strengthen the case for a September 16–17 Fed rate cut. Conversely, an upside surprise in CPI could delay the easing cycle, but for now, sentiment strongly favors a dovish Fed trajectory.

Technical Analysis

Gold Hits Record High as Weak NFP Fuels Fed Rate Cut Bets_1

Gold (XAU/USD) extended its bullish momentum to hit a record high of $3,600, consolidating gains between $3,590–$3,600. The breakout highlights strong upward momentum, with bulls eyeing immediate resistance at $3,650 and the next key barrier at $3,700.

On the downside, failure to maintain above $3,600 could trigger profit-taking, initially exposing support at the September 4 swing low of $3,511. A deeper correction would test the psychological $3,500 level, which remains the most critical support zone for bulls to defend in order to sustain the broader uptrend.

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