Gold Surges as Fed Rate Cut Expectations Intensify

Gold futures climbed 0.3% to $3,409.30 per troy ounce, extending gains for a second consecutive session amid growing expectations for Federal Reserve rate cuts. The precious metal has risen $81.20, or 2.47%, over two sessions as economic data fuels monetary policy speculation.

July's nonfarm payrolls rose just 73,000, well below expectations, while prior months saw downward revisions totaling 258,000 jobs. June's employment gains were revised down to merely 14,000 positions, revealing deeper labor market strain than previously recognized.

The disappointing data has dramatically shifted Fed expectations. Markets now price in an 81% probability of a September rate cut, up from 63% a week ago, with over 63 basis points of easing expected by year-end. According to Samer Hasn of XS.com, "Markets have grown more confident in a single rate cut by September, and are even pricing in up to 75 basis points of easing before year-end."

Silver held around $37 per ounce after gaining nearly 1% in the previous session. Both metals have benefited from a weakening dollar and falling Treasury yields as rate cut expectations intensify, reducing the opportunity cost of holding non-yielding assets.

Trade Representative Jamieson Greer indicated that Trump's tariffs on multiple countries will likely remain in place, adding economic uncertainty. Combined with soft employment data, analysts suggest "any pullbacks in the precious metal could be of a shallow nature."

Citi raised its three-month gold forecast to $3,500 per ounce from $3,300, expanding the expected trading range to $3,300-$3,600, citing deteriorating U.S. growth and inflation outlook. Gold traditionally thrives in low-interest-rate environments during periods of economic and political uncertainty.

The convergence of weak economic data, dovish Fed expectations, and ongoing trade tensions creates a supportive environment for continued precious metals strength as markets position for potential monetary policy accommodation.

Wishing you as always good trading,