Gold prices rose by more than 1% during Thursday’s trading, supported by a weaker dollar and U.S. Treasury yields. At the same time, investors are awaiting the non-farm payrolls report in the United States, which could have a major impact on expectations for monetary policy by the Federal Reserve.
### Gold regains strength after a sharp decline
Spot gold rose 1.1% to $4,434.70 per ounce by 04:25 GMT. The increase came after the yellow metal hit its lowest level in about a month in the previous session. US gold futures also rose 1.5% to $4,480.10.
### A weaker dollar supports gold prices
The US dollar came under pressure during trading, while yields on US Treasury bonds fell from their highest levels in several years. A weaker dollar supports gold, because a decline in the value of the US currency makes dollar-priced metals cheaper for investors using other currencies. Also, falling bond yields reduce the opportunity cost of holding gold, which does not provide a fixed return.
### The US jobs report under the microscope
Markets are now turning their attention to the US non-farm payrolls report due on Friday. The data is especially important because it could influence the Fed’s interest-rate decisions at its next meeting.
A report on private jobs from ADP showed that hiring in the US private sector rose at a moderate pace during August. Ilya SpiVak, head of global macroeconomics at Tastylive, said the jobs report could be the most important event for markets this week. He added that weaker-than-expected results could prompt investors to scale back their bets on a rate hike in September, which could give gold an additional boost.
### Is gold heading toward $4,500?
SpiVak believes that if gold moves above the $4,400 level, it could open the door to further gains. If prices hold above this level, gold could move toward $4,500, then $4,700 at a later stage.
The FedWatch tool by CME Group shows that markets are currently pricing in a 62% likelihood that the Fed will raise interest rates in September.
### US economic data does not settle the Fed’s direction
A Federal Reserve report released on Wednesday showed that US economic activity grew only modestly over the past few weeks. Employment rose slightly, while prices increased at a moderate pace. The data was mixed, making it difficult to determine what monetary policymakers will do at the September meeting.
Fed officials will meet on Sept. 15 and 16 to discuss the path of interest rates.
### Interest rates and inflation determine gold’s move
Gold is traditionally seen as a hedge against inflation. But higher interest rates weigh on its appeal, because gold does not provide a periodic return, making holding it less attractive when yields on income-producing assets rise. Therefore, any shift in expectations for US interest rates could trigger strong moves in the price of the yellow metal.
### Geopolitical tensions remain a factor
On the geopolitical front, senior advisers to US President Donald Trump are working to prevent the scope of the war with Iran from widening ahead of the midterm elections scheduled for November. According to people familiar with the discussions, the US administration is seeking to avoid escalation before the Nov. 3 election. Sources indicated the White House may consider increasing military moves after the voting ends. Any new developments in the Middle East could affect demand for gold as a safe-haven asset.
### Performance of other precious metals
The rise was not limited to gold. Spot silver climbed 1.2% to $66.08 per ounce. Platinum also rose 1% to $1,777.79. Palladium increased 0.8% to $1,356.50 per ounce.
### Summary
Gold regained momentum as the dollar and US bond yields retreated. But the next trend will depend largely on US jobs data and expectations for interest rates. A jobs report weaker than expected could increase bets on cutting or holding rates steady, giving gold a chance to continue its rise.