Gold News: Fed Rate Cut Bets Rise—Will Weak Payrolls Spark a Gold Rally?

Gold Prices Hold Firm Ahead of Non-Farm Payrolls as Fed Pivot Bets Grow

Gold posted a modest gain Friday, holding steady above key technical support as traders look to today’s non-farm payrolls (NFP) report for direction. The precious metal is on track for a weekly rise, buoyed by soft U.S. data earlier in the week that has fueled expectations for Federal Reserve rate cuts.

At 11:57 GMT, XAU/USD is trading $3360.32, up $7.59 or +0.23%.

Is the U.S. Labor Market Weak Enough for the Fed to Cut?

The market’s focus is squarely on the May jobs report, due at 12:30 GMT. A disappointing read could accelerate expectations for policy easing. Economists surveyed by Reuters expect a 130,000 increase in non-farm payrolls, while the Dow Jones consensus points to 125,000. The unemployment rate is forecast to hold steady at 4.2%.

This comes after Thursday’s jobless claims data revealed a seven-month high in new unemployment applications, adding to concerns about a cooling labor market. Combined with soft services sector numbers, markets are increasingly pricing in the likelihood that the Fed will be pressured into easing policy if today’s data misses expectations.

Gold Holds Support as Treasury Yields Drift Lower

Yields on U.S. Treasury bonds edged down ahead of the report, with the 10-year slipping to 4.379%, the 30-year at 4.87%, and the 2-year nearly flat at 3.91%. Lower yields typically support gold prices by reducing the opportunity cost of holding non-yielding bullion.

Technically, gold remains in consolidation after four straight days of range-bound trading. Support sits at the 50-day moving average of $3261.80, while initial resistance stands at $3403.63. A breakout above this week’s high could trigger a run toward $3435.06 and possibly retest the record high of $3500.20.

Fed Policy Outlook and Gold Price Forecast

With rate cut bets growing on the back of softer economic data, gold remains underpinned. Traders are watching for a clear signal from the NFP report to confirm the next move. As long as prices hold above the 50-day average, the market bias remains bullish.

Unless payrolls come in well above forecasts, gold appears positioned to benefit from a dovish Fed tilt. A miss today would likely cement expectations for policy easing, potentially lifting gold toward $3435 and setting up a test of the $3500 mark in the near term.

More Information in our Economic Calendar.