Gold (XAU/USD) stalls its recovery and trades on the back foot for a second consecutive day on Tuesday as a steady US Dollar (USD) and doubts over the Federal Reserve’s (Fed) interest rate path keep the upside in check.
At the time of writing, XAU/USD is trading flat around $4,150 after hitting an intraday low of $4,116
Recent US labor market data point to a gradual slowdown after improving earlier this year, reducing expectations of a near-term Fed rate hike and helping Gold recover from the more than seven-month low of $3,941 touched last week. The four-week average of the ADP Employment Change eased to 21K from 24.25K. This follows last week’s disappointing June Nonfarm Payrolls (NFP) report, which showed the US economy added just 57K jobs, well below market expectations of 110K.
However, the data did little to change the broader hawkish Fed narrative. New York Fed President John Williams said on Tuesday that the risks to the labor market are “pretty balanced,” inflation is “still quite high,” and monetary policy is “well positioned” to achieve the Fed’s goals. According to the CME FedWatch Tool, traders are pricing in a 75% probability that the US central bank will leave borrowing costs unchanged at this month’s meeting.