Gold consolidates below record highs as traders eye US labor market dat

LONDON (September 4) Gold (XAU/USD) is taking a breather on Thursday after hitting a fresh record high of $3,578.50 on Wednesday, pausing a remarkable seven-day rally. At the time of writing, XAU/USD is trading around $3,540 during the European session, after slipping toward $3,510 earlier in the day, as profit-taking and a steady US Dollar (USD) weigh on sentiment. The move also comes as calm returns to global bond markets after this week’s turmoil, easing some of the safe-haven rush that had fueled bullion’s record run.

The broader rally in Gold remains intact, underpinned by firm expectations that the Federal Reserve (Fed) will lower interest rates in its September 16-17 monetary policy meeting. Lower borrowing costs reduce the opportunity cost of holding non-yielding bullion, while a broadly weaker US Dollar keeps demand supported. At the same time, calmer bond markets, ongoing global trade tensions, and concerns over fiscal credibility in major economies and the Fed's independence continue to underpin safe-haven demand.

Investor focus now turns to the US labor market, with the ADP Employment Change report for August taking center stage ahead of Friday’s Nonfarm Payrolls (NFP). Weekly jobless claims, second-quarter productivity and labor cost data, and the ISM Services PMI, alongside updated S&P Global surveys, are also due later in the day. These releases will provide fresh insight into the labor market and service sector, shaping expectations for the Fed’s September meeting and near-term direction in Gold.

Market movers: DXY holds firm, bond markets calm, Trump’s tariffs under legal fire

• The US Dollar Index (DXY), which measures the Greenback's value against a basket of six major currencies, is holding firm above 98.00 after retracing part of Wednesday’s losses. The index continues to trade within the narrow range established since early August, as traders await key US economic releases.
• Easing US Treasury yields help limit downside in Gold, with the 10-year slipping about 2 bps to 4.19%, the 30-year down nearly 3 bps to 4.87%, and 10-year TIPS easing 3 bps to 1.79%. Softer yields provide a cushion for bullion, keeping Thursday’s mild correction contained.
• Global bond markets show signs of stability after a recent surge pushed long-term yields in Japan and the UK to multi-decade highs. A strong debt auction in Tokyo and reassurances from UK policymakers have eased investor anxiety, though underlying fiscal concerns persist. Elevated borrowing costs across major economies continue to raise questions about debt sustainability, keeping Gold supported as investors hedge against policy risk and credit pressures.
• The Trump administration on Wednesday asked the US Supreme Court to overturn a federal appeals court ruling that struck down most of the US president's global tariffs. Lower courts have argued that the International Emergency Economic Powers Act (IEEPA) does not grant presidents unlimited tariff powers, citing the “major questions” doctrine. At least eight lawsuits are challenging the measures, with the Justice Department seeking a review by September 10 and hearings in November. The tariffs remain in place until the Court delivers its verdict, leaving Trump’s broader economic agenda under legal scrutiny.
• US JOLTS Job Openings fell to 7.18 million in July, the lowest in ten months, signaling softer labor demand. The decline suggests downside risks to employment are rising, reinforcing the case for a 25 basis point Fed rate cut in September. According to the CME FedWatch tool, markets are now fully pricing in nearly 97% odds of a cut at the upcoming meeting.
• In parallel, the September Fed Beige Book points to upside risk to the US inflation outlook and will likely keep the central bank on a cautious easing path. According to the Beige Book, “Most Districts reported that their firms were expecting price increases to continue in the months ahead, with three of those Districts noting that the pace of price increases was expected to rise further.”
• Federal Reserve officials struck a dovish tone on Wednesday. Governor Christopher Waller said the Fed should “start cutting rates at the next meeting,” adding that multiple cuts could follow within six months. Atlanta Fed President Raphael Bostic noted that “some easing in policy — probably on the order of 25 basis points — will be appropriate” this year, while stressing inflation risks remain. St. Louis Fed President Alberto Musalem said policy is “in the right place for now,” but warned that cooling in the labor market could justify a shift if the trend continues.

FXStreet