Gold (XAU) Price Prediction: Will the jobs data prompt the Fed to cut rates and raise gold prices?

If the report shows strong job growth and subdued unemployment, that could reduce the likelihood of a rate cut in December. Such an outcome would strengthen the dollar and likely weigh on gold prices by increasing the opportunity cost of holding non-profitable assets. Conversely, weaker-than-expected employment numbers could strengthen interest rate cut expectations, weaken the dollar and support gold prices.

Is inflation the Fed’s next move?

Core PCE inflation data released last week showed persistent inflation pressures, complicating the Federal Reserve’s ability to aggressively pursue rate cuts. Still, expectations of easing remain as market prices show a 66 percent chance of a 25 basis point cut in December.

The development of the dollar will remain a decisive factor. After falling midweek, the greenback ended November higher, buoyed by the prospect of continued interest rate hikes. If Friday’s jobs data fuels expectations of tighter Fed policy, further dollar strength could limit potential gains for gold.

Can geopolitical risks keep gold afloat?

While safe haven demand was subdued earlier in the week due to optimism over Middle East ceasefire talks, ongoing risks such as the ongoing Russia-Ukraine conflict provide a floor for gold prices. Increased geopolitical tensions could boost demand for gold bullion again, especially if market sentiment turns risk-off.

Where are gold prices heading next week?