Gold Holds Above $4,150 as Soft Jobs Data Cap Fed Hikes<

Key Moments

Gold Holds Firm After US Labor Data Surprise

Gold prices are edging higher around $4,160 in early Asian trading on Monday, extending last week’s rebound as weaker US employment figures pressure the US Dollar (USD). The move follows a softer-than-expected US Nonfarm Payrolls (NFP) report, which has prompted traders to scale back expectations for additional Federal Reserve rate increases later this month.

According to the US Bureau of Labor Statistics (BLS), NFP increased by 29K in September. This followed a 133K gain in August, revised down from 162K, and fell short of the market consensus of 90K. The weaker jobs print has reinforced the view that the Fed may opt to keep policy rates unchanged in the near term.

Data from the CME FedWatch Tool show that market participants currently assign roughly a 22.1% probability to a rate hike this month, sharply lower than the approximately 70% chance priced in earlier in the week. Since gold does not provide yield, higher interest rates typically disadvantage the metal by making interest-bearing assets more attractive relative to bullion.

Oil-Linked Inflation Risks and Geopolitical Tensions

Despite the support from a softer US Dollar and reduced rate-hike expectations, gold’s upside is facing a potential cap from renewed inflation concerns tied to higher oil prices. Those concerns are being stoked by ongoing tensions between the United States and Iran.

Iran’s Foreign Ministry spokesman Esmaeil Baqaei said on Sunday that the Strait of Hormuz is the main focus of Iran’s negotiations to end the war with the United States (US). Meanwhile, Parliament speaker Mohammad Bagher Ghalibaf stated that Tehran is not retreating from its conditions for reopening the key maritime chokepoint, rejecting what he described as recent US proposals as “unilateral demands.”

Real Yields Weigh on Bullion Despite Softer PCE

Analysts at UOB Group highlighted that elevated real yields continue to restrain gold’s performance even as inflation data soften. They noted that “Gold spot was softer at $4,156/oz as elevated real yields capped the bullion’s upside,” and that the metal “revers[ed] earlier gains – which saw it trade as high as $4,219/oz – to close 0.6% lower at $4,157/oz as elevated real yields continued to cap the bullion’s upside.”

On the macroeconomic side, UOB Group pointed out that “US headline PCE rose 0.3% m/m in Aug, in line with estimates, while the y/y rate fell to 3.4% from 3.7% in prior month,” adding that recent “BEA methodology revisions improved the optics but did not materially alter the underlying inflation narrative.”

Logan’s Hawkish Tone Supports the Dollar and Rate Expectations

Federal Reserve official Logan has recently delivered a more hawkish policy message, according to the FXS Speechtracker assessment. The speech scored 9.2/10 compared with an 8.1/10 historical average, signaling a stronger inclination toward further tightening than the established baseline.

While Logan acknowledged that higher market yields might reflect rising term premiums, potentially lessening the need for additional rate hikes, this nuance has been overshadowed by explicit guidance in favor of at least 50 bps more tightening and several further moves to restore price stability. Logan’s view that policy is not yet restrictive, combined with an ongoing expansion and a broadly balanced labor market, reinforces the signal that the Fed stands ready to push rates higher until inflation convincingly trends toward 2%.

Reflecting this tone, the FXS Fed Sentiment Index climbed by 1.68 points to 136.59, remaining firmly in hawkish territory and broadly aligned with the elevated FXS Speechtracker reading. The move indicates that perceived Fed rhetoric has shifted further toward sustained tightening, underpinning expectations of additional rate increases and offering structural support to the US Dollar.

Technical Snapshot: Bearish Bias Persists for XAU/USD

On the daily chart, XAU/USD continues to exhibit a bearish near-term posture. Price action remains below both the 100-day simple moving average (SMA) and the middle line of the Bollinger Bands, signaling that sellers still hold the upper hand. The metal is trading just above the lower Bollinger band, suggesting that the recent decline is pressing into the lower edge of the current volatility range.

The Relative Strength Index (14) stands at 39.50, firmly in bearish territory but not yet at oversold levels. This configuration points to ongoing downside pressure rather than signs of capitulation.

On the upside, the first significant barrier is clustered around $4,275, where both the Bollinger middle band and the 100-day SMA converge, forming a strong cap that must be reclaimed to ease the bearish tone. A subsequent hurdle is seen near the upper Bollinger band around $4,445.

On the downside, the lower Bollinger band at $4,102.30 offers immediate support. A decisive move below this zone would signal scope for a deeper correction, while holding above it would keep XAU/USD in a corrective bearish phase within its broader range.