Disappointing Jobs Report Triggers Dovish Repricing
Friday’s July nonfarm payrolls report was the catalyst for gold’s rebound. The U.S. economy added only 73,000 jobs, well below the 110,000 consensus. June and May figures were also revised sharply lower. The unemployment rate ticked up to 4.2%, and Treasury yields plunged in response—most notably the 2-year, which dropped 27 basis points to 3.68%. Rate futures now price in 63 basis points of easing by year-end, with the first cut expected in September.
Tariffs, Dollar Weakness Underpin Safe-Haven Demand
Tariff headlines added further support. President Trump reinstated sweeping import levies, raising concerns over inflation and global trade. While this complicates the Fed’s inflation mandate, it also increases safe-haven demand. The U.S. Dollar Index dropped 1.2% Friday, its largest daily loss since January 2023, helping lift gold as dollar-denominated assets became more attractive to foreign buyers.
Gold Prices Forecast: Bullish Bias If CPI Cools
This week’s U.S. CPI report (due Tuesday) is the key event. A soft core print (expected at +0.3% m/m, +3.0% y/y) could cement the case for a September cut, triggering further upside in gold. A stronger-than-expected CPI, however, would reinforce Powell’s caution and likely stall the rally.