Gold kicks off a volatile week with a bullish rebound after disappointing US jobs data

Gold Kicks Off a Volatile Week with a Bullish Rebound After Disappointing U.S. Jobs Data… Will the Fed’s September Playbook Shift?

Gold’s movement last week fluctuated between persistent downside pressure from a stronger dollar and rising Treasury yields on one side, and a sharp end-of-week rebound on the other—driven by a disappointing U.S. labor market report. Despite dipping below $3,270, the yellow metal closed the week back above $3,350, signaling a bullish technical recovery that may reshape short-term expectations.

Earlier in the week, gold came under heavy selling pressure following the Federal Reserve’s decision to keep interest rates unchanged. The decision was marked by a hawkish tone, with two dissenting votes—Waller and Bowman—against a rate cut. Fed Chair Jerome Powell made it explicit that it was not yet time to pivot toward easing. Meanwhile, economic data showed relative strength, with Q2 U.S. GDP coming in at 3%, beating expectations, and ADP private employment figures showing stronger-than-forecast job gains.

However, Friday’s nonfarm payroll (NFP) report dramatically shifted market sentiment. The U.S. economy added just 73,000 jobs in July—far below estimates—while prior months’ gains were revised downward by a combined 258,000 jobs. The unemployment rate also ticked up to 4.2%. This sudden deterioration in labor market conditions dealt a double blow to hawkish bets. As a direct response, the CME FedWatch Tool showed the probability of a September rate cut rising to nearly 70%, up from below 30% previously. U.S. bond yields fell sharply, giving gold a strong technical lift and reviving its bullish tone.

Interestingly, this market pivot came amid encouraging developments on the trade front. The U.S. and the European Union reached a comprehensive tariff agreement, while U.S.-China negotiations showed signs of progress toward extending the current tariff truce. These developments, though positive for broader risk sentiment, had been weighing on gold as safe-haven demand ebbed.

Nonetheless, challenges persist. Inflation, according to Powell, remains relatively elevated, and monetary policy remains restrictive—even if not currently hindering economic growth. But with growing signs of labor market weakness, the case for keeping rates unchanged may start to erode, especially if upcoming inflation figures underperform expectations.

This week could prove pivotal in confirming or rejecting this emerging shift. Tuesday’s ISM Services PMI at 17:00 GMT+3 will provide another test of the economy’s resilience. A reading below 50 would suggest contraction in the services sector—potentially weighing on the dollar and supporting gold. Conversely, a stronger-than-expected print could prompt markets to reevaluate their September rate cut expectations.

In this volatile environment, investors will closely monitor Fed officials’ remarks as the post-meeting media blackout ends. Any dovish tone—especially from core policymakers—could drive yields lower and push gold prices higher. On the other hand, if officials downplay the weak jobs data and stick to a cautious stance on inflation, gold could once again face renewed selling pressure.

Thus, gold enters a new trading week having regained some of its shine—but still without a clear directional conviction. The tug-of-war between labor market softness and monetary policy hawkishness remains the dominant theme likely to dictate the metal’s trajectory in the weeks ahead.