Gold prices settled into a narrow band on September 4, trading between $4,469 and $4,477 per ounce, as the market collectively held its breath ahead of the most closely watched economic release of the month. The metal was on track for a modest weekly gain, buoyed by a roughly 2% surge in the prior session.
That prior-session rally came courtesy of Federal Reserve Governor Christopher Waller, whose comments dialed back expectations for an immediate rate hike.
The jobs report looms large
The August nonfarm payrolls report, due at 8:30 a.m. ET, was expected to show somewhere between 56,000 and 65,000 jobs added, with the unemployment rate projected to land between 4.1% and 4.2%.
ADP’s private payrolls report for August showed only 38,000 jobs added, badly missing the 47,000 consensus estimate. That was the weakest monthly gain since January.
The CME FedWatch Tool was pricing in roughly 50% odds of a rate increase at the Fed’s September 15-16 meeting, reflecting the tug of war between Fed Chair Kevin Warsh’s hawkish commentary at Jackson Hole and the subsequent pushback from officials like Waller.
Gold’s wild August and the Jackson Hole pullback
Gold had a strong August, climbing above $4,600 per ounce at one point. Then Jackson Hole happened. Warsh’s hawkish signals from the annual symposium sent gold pulling back sharply from those highs, shedding more than $100 per ounce as rate-hike fears resurfaced.
The current price near $4,470 represents a middle ground. Gold has recovered from the worst of the post-Jackson Hole selling but hasn’t reclaimed the $4,600 level.
What the payrolls number means for gold’s next move
A weak jobs report, something in the range of ADP’s 38,000 figure or even below the low end of the 56,000-65,000 consensus, would likely push rate-hike odds lower. A strong report, above 70,000 with a steady or declining unemployment rate, would make the September rate hike more probable. A number that lands right in the expected range, such as a 60,000 print with 4.2% unemployment, would not resolve the debate either way.
The 50-50 odds on the September meeting mean that volatility around the payrolls release could be amplified, with even small surprises capable of triggering outsized moves.