Gold steadies below record highs as traders await US Nonfarm Payrolls

September (September 5) Gold (XAU/USD) is trading flat on Friday, holding around $3,550 at the time of writing, as investors turn cautious ahead of the US Nonfarm Payrolls (NFP) report due at 12:30 GMT. The precious metal is consolidating after Thursday’s mild correction from record highs above $3,570, with traders choosing to wait for fresh cues from the August US employment report.

Recent labor market indicators have pointed to cooling momentum. ADP private payrolls came out at an increase of 54K in August, below expectations and the previous 106K, while JOLTS Job Openings fell to 7.18 million from 7.36 million. Initial Jobless Claims for the latest week came in at 237K, above both expectations of 230K and the prior 229K, underscoring signs of gradual softening in labor demand. Meanwhile, ISM Employment Indexes for both Manufacturing (43.8) and Services (46.5) remain in contraction territory. The string of weak readings has reinforced the view that the Federal Reserve (Fed) is now more worried about job market risks than persistent inflation.

Taken all together, the data highlight the labor market is losing steam, reinforcing expectations that the Fed will ease policy at its September 16-17 meeting. Markets are already pricing in almost a full 25 basis point (bps) rate cut, but NFP release could prove decisive in determining whether the central bank sticks to that move or considers a larger 50 bps cut to counter slowing growth. For Gold, the combination of subdued Treasury yields, a weaker US Dollar, and the Fed’s dovish tilt provides a strong cushion, keeping bullion near record levels.

Market movers: Gold steadies as the US Dollar weakens, yields slide

• The US Dollar Index (DXY), which measures the Greenback’s value against a basket of six major currencies, falls towards 98.00, giving back Thursday’s gains as traders reposition ahead of the NFP release.
• Global bond markets eased after recent spikes, with US Treasury yields retreating across the curve — the benchmark 10-year hovering near its lowest since May 1 at 4.161%, the 30-year slipping to a three-week low around 4.855%, and the rate-sensitive 2-year sliding to 3.590%, also its lowest since May 1. Lower yields reduce the opportunity cost of holding non-interest-bearing bullion, cushioning Gold’s downside.
• The August Nonfarm Payrolls report is expected to show job growth of 75K, slightly above July’s 73K. Alongside payrolls, Average Hourly Earnings are projected at 0.3% MoM, matching the prior month, while annual wage growth is expected to slow to 3.7% YoY from 3.9%. The Unemployment Rate is forecast to edge up to 4.3% from 4.2%, its highest level since 2021.
• On Friday, US President Donald Trump signed an executive order lowering tariffs on Japanese auto imports to 15% from 27.5%, effective in seven days and retroactive to early August. The move is part of a broader US-Japan economic package that includes a $550 billion Japanese investment commitment in the US infrastructure, energy, and semiconductor projects, as well as an agreement for Tokyo to expand purchases of Alaskan LNG. While the tariff relief excludes aircraft and parts, the deal is seen as a significant boost for Japanese automakers.
• On Thursday, Fed nominee Stephen Miran told a Senate panel he is “not at all” Trump’s puppet, pushing back against concerns over political influence at the central bank. Miran plans to take unpaid leave from his White House advisory role if confirmed, a move critics say still blurs the Fed’s independence. Beyond the independence debate, Miran pledged to act on macro-economic analysis and remain committed to the Fed’s dual mandate.
• Chicago Fed President Austan Goolsbee said on Thursday that he is unsure if an interest-rate cut will be appropriate at the Fed's September 16-17 meeting because of continued uncertainty about how much tariffs may accelerate inflation and how much they may be weighing on the labor market.

FXStreet