Gold prices rebounded on Thursday following the release of weaker-than-expected US job data yesterday, marking the lowest level in three-and-a-half years.
The drop in job openings reinforced expectations of a slowing labour market and increased the probability of an aggressive rate cut by the Federal Reserve this month.
Additionally, the decline in manufacturing activity has raised concerns about the US economy’s resilience to higher interest rates.
As a result, investors have adjusted their expectations for up to a total of 125 basis points in rate cuts over the Fed’s remaining three meetings this year. These developments have created a more favorable environment for gold prices, while the US dollar and treasury yields could continue to trend downward.
Looking ahead, the ADP Employment Change and Jobless Claims reports will provide further insight into the US labour market. However, the key event on the calendar will be the US Nonfarm Payrolls (NFP) report on Friday.
Should the NFP figures show a lower-than-expected increase, expectations of a larger rate cut could increase, driving gold up. Moreover, increasing demand from central banks and concerns regarding economic slowdowns in various regions like China could support gold prices.
