“Traders are looking for clearer direction and all eyes are on the upcoming US employment report, which could serve as the next big catalyst for gold prices,” said Mark Ashford, senior market analyst at Global Commodities. “The strength of the dollar has been a major headwind for gold.”
US dollar rises on strong labor market data
The US dollar is gaining ground and nearing a one-month high as recent economic indicators paint a picture of a stable labor market. Unemployment claims rose slightly to 225,000 in the week ending September 28, up from 218,000 the previous week, according to the U.S. Department of Labor.
Meanwhile, private sector employment saw an unexpected increase in job openings in August, reinforcing the strength of the U.S. labor market.
Additionally, the Institute for Supply Management (ISM) reported that the non-manufacturing PMI rose to 54.9 in September, the highest since February 2023.
Robust labor market data has dampened expectations for significant Fed rate cuts, further supporting the US dollar and creating headwinds for non-yielding assets such as gold.
Geopolitical tensions provide limited support for the gold price
While gold’s safe-haven appeal is boosted by the uncertain geopolitical landscape, this has not yet been enough to push prices higher. Hezbollah’s recent launch of 230 projectiles from Lebanon into Israel and retaliatory Israeli airstrikes have increased the risk of a broader regional conflict.