(Kitco News) - Gold is staging a powerful late-week comeback, shaking off early-week losses and surging toward a key resistance level of $3,400 an ounce as weakening U.S. labor data revives hopes for a Federal Reserve rate cut in September.
In an impressive recovery, gold prices are poised to end the week above near-term resistance at $3,350 an ounce. Spot gold last traded at $3,360.25 an ounce. The precious metal is ending the week up 0.7%; however, prices are up nearly 3% from Wednesday’s lows.
Lukman Otunuga, Senior Market Strategist at FXTM, said gold’s rally on Friday has been impressive, driven by a collapse in the U.S. dollar.
“Looking at the charts, bulls are on a rampage today with $3,400 less than 2% away from current prices,” he said. “The weekly candle is turning aggressively bullish with prices above the $3,330 resistance. A weekly close above this level may signal a move toward $3,400. Should prices slip below $3,330, we could see a decline back toward $3,300 and the 100-day SMA.”
Gold experienced significant selling pressure on Wednesday after the Federal Reserve left interest rates unchanged, and Fed Chair Jerome Powell introduced uncertainty around a potential rate cut in September.
“We have made no decisions about September,” Powell said during the press conference following the central bank’s decision.
Any lingering doubt about a September rate cut was put to rest following distressing U.S. labor market data. According to the Bureau of Labor Statistics, the economy created only 73,000 jobs last month. Additionally, total job growth for May and June was revised down by 258,000. Based on the revised data, only 14,000 jobs were created in June and 19,000 in May.
“This weaker-than-anticipated jobs report undermines confidence in the U.S. economy, pressuring the dollar as markets anticipate a more dovish Federal Reserve, potentially leaning toward rate cuts to stimulate growth. For gold, the disappointing labor data reinforces its role as a hedge against economic uncertainty, supporting price gains as investors seek stability,” said Aaron Hill, Senior Market Analyst at FP Markets.
According to the CME FedWatch Tool, markets now see roughly a 92% chance of the Federal Reserve easing in September. On Thursday, markets were only pricing in a 38% chance of a cut.
Jamie Cox, Managing Partner at Harris Financial Group, said the Federal Reserve could end up regretting its decision to keep rates unchanged earlier this week.
“September is a lock for a rate cut, and it might even be a 50-basis-point move to make up for lost time,” he said.
Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, said that given the aggressive shift in interest rate expectations, he sees potential for a solid run to $3,400 an ounce.
“If the Fed signals a dovish stance, speculative inflows could push prices past that psychological $3,400 mark, particularly as investors seek safe-haven assets amid economic uncertainty. Technical indicators, like the bullish trend in gold ETFs and rising open interest, support this potential breakout,” he said. “We believe traders are already positioning for a fall rally, with some analysts pointing to seasonal patterns where gold often gains traction post-August. While volatility could still cap short-term gains, the broader trend looks upbeat, and the typical summer lull may already be behind us.”
With a light calendar of economic data next week, investors will continue to digest Friday’s employment report. At the same time, some analysts expect that the economic uncertainty stemming from President Donald Trump’s ongoing trade war and global tariffs will further bolster safe-haven demand for gold.
Trade tensions are adding another layer of support for gold. August 1 marked the deadline set by President Trump for countries to finalize trade deals. While agreements were reached with Japan and the EU—resulting in a 15% rise in import fees—many key trading partners remain exposed to elevated tariffs.
As a result, many nations’ exports now face significant cost increases. Specifically, Canada, America’s second-largest trading partner—accounting for nearly 17% of all U.S. exports—faces elevated tariffs of 35%. Meanwhile, Indian imports face a 25% increase; Taiwanese exports will be taxed at 20%; South African products face a 30% tariff; and Swiss goods will be subject to a 39% duty, to name just a few examples.
Michael Brown, Market Strategist at Pepperstone, said he remains bullish on gold, viewing global trade uncertainty as a key driver of the metal’s value as a monetary asset.
“The diversification of reserves out of the USD and into gold—especially concentrated in emerging markets—is set to continue for the foreseeable future. Of course, potential haven demand arising from fears over the state of the U.S. economy would provide further support to that bull case,” he said. “The upside levels to watch remain the $3,400 mark, then the highs around $3,445, before a potential move toward fresh highs at $3,500. I certainly wouldn’t rule out new highs before the year is out.”
Chris Vecchio, Head of Futures Strategies and Forex at Tastylive.com, said he sees gold as well-positioned to benefit as a global currency.
“Tariffs mean nations will do fewer trades using U.S. dollars, so I would expect gold to continue performing well as the world looks for another monetary asset,” he said.
Economic data to watch next week:
Tuesday: ISM Services PMI
Wednesday: 10-year US Treasury auction
Thursday: Bank of England monetary policy decision, US weekly jobless claims
