Gold price rallies more than 1.50% on Friday following the release of a dismal Nonfarm Payrolls (NFP) report in the United States (US), which showed the jobs market is cooling faster than expected. Also, an escalation of geopolitical risks between Russia and the US prompted traders to buy Gold, which hovers near $3,350 at the time of writing.
Market participants had begun to price in an interest rate cut by the Federal Reserve (Fed), following July's jobs data. Although the Unemployment Rate was nearly unchanged, cracks in the labor market vindicated Fed Governors Michelle Bowman and Christopher Waller, who favored a 25-basis point (bps) rate cut at the July 29-30 meeting.
Additional data revealed that business activity in the manufacturing sector remains at recessionary levels, as announced by the Institute for Supply Management (ISM) in its July report. At the same time, Consumer Sentiment deteriorated, according to the University of Michigan (UoM) survey.
Consequently, Gold prices are up after diving to a one-month low of $3,268 on Thursday, on a strong jobless claims report. May and June payrolls were revised down by a massive 258K print, suggesting a weaker jobs market. This was the second-largest, two-month revision in the NFP since 1979, surpassed only by the April 2020 report.
The CBOT December 2025 fed funds rate futures contract suggests that investors expect at least 57 basis points of easing toward the end of the year. Odds for the September meeting are at a 76% chance of a 25 bps rate cut toward the 4.00-4.25% range.
On the geopolitical front, US President Donald Trump revealed a wave of tariffs on dozens of trading partners. Recently, Trump dispatched two nuclear submarines to be positioned at appropriate regions in response to Russian Deputy Chairman Medvedev, who said that Trump is playing a game of ultimatums with Russia, adding that this is a "step towards war".
Medvedev's comments were related to Washington's reduction of the deadline for Russia to get a peace deal with Ukraine.
Source: Fxstreet
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