Overnight, London spot precious metals traded with a weak bias, yet spot gold held the $4,200 per ounce psychological level. COMEX gold futures for August delivery closed 0.09% lower, while SHFE gold edged down 0.01%. Earlier this week, a favorable ADP employment report boosted gold prices, leading to a rebound. The market is now squarely focused on the release of the U.S. July non-farm payrolls data tonight, with consensus estimates for 83,000 new jobs, compared to the prior figure of 57,000, and an unemployment rate expected at 4.3%, up from 4.2%. A cautious sentiment is building as market participants await the data, which will influence their assessment of monetary policy expectations. Gold's volatility is likely to increase following the release.
On the geopolitical front, Iranian media reported that Iranian forces struck an enemy target near the Strait. Iranian officials also stated that a deal regarding the Strait is nearing completion, that negotiations between Iran and the U.S. have not taken place, and that the Strait negotiations are limited to Iran and one other Arab nation. Significant uncertainty persists in U.S.-Iran relations, keeping oil prices volatile. If this impacts the Federal Reserve's assessment of inflation, a rate hike in September remains a possibility. The market is also waiting for the latest guidance from the U.S. July non-farm payrolls data. However, based on recent gold price action, it appears to be showing a degree of desensitisation to both the U.S.-Iran geopolitical situation and potential Fed rate hikes, performing stronger than anticipated. This may be linked to market expectations of a potential U.S. economic stagflation scenario, which warrants continued monitoring.
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