Gold surges past $3,450 as traders eye Fed independence, NFPs
Gold rises above $3,450 and may challenge the $3,500 record on Monday, as US markets are quiet for Labor Day. Concerns regarding the Federal Reserve’s (Fed) independence and ongoing uncertainty about the trade war have kept the US Dollar subdued and increased flows toward the precious metals sector. At the time of writing, the XAU/USD trades at $3,476, up by over 0.87%.
Last week, inflation data showed prices were nearly 3% higher on an annual basis, above the Fed's 2% target. Fed Chair Jerome Powell highlighted labor market weaknesses at Jackson Hole, making jobs data the focus, while traders overlooked the core PCE Price Index release.
The core PCE rose 2.9% YoY in July as expected, showing that the disinflation process is far from resuming. Despite inflation remaining above target, the expectations for a rate cut persist due to labor market weakness. The chances of a Fed September rate cut remain high with odds standing at 85%, according to Prime Market Terminal interest rate probabilities tool.
In the meantime, Gold traders are laser focused on the release of Nonfarm Payrolls (NFP) figures and further developments in the firing of Fed Governor Lisa Cook by US President Donald Trump.
XAU/USD has extended its gains as market participants believe that the White House’s response could undermine the Fed’s independence, leading to concerns about monetary policy stability. Also, the decision of the US Court of Appeals of ruling most tariffs illegally would keep uncertainty in the markets and boost Bullion’s appeal.
Source : Fxstreet
