is coming under clear pressure at the start of this week, with the price falling toward the $4,395-per-ounce area after stronger-than-expected U.S. jobs data reshaped market expectations regarding the Federal Reserve’s monetary policy path. The U.S. economy added 162,000 nonfarm jobs in August, well above market expectations of just 56,000, in a surprise that once again put the strength of the labor market at the center of attention.
From my perspective, gold’s current reaction makes sense in the short term, but it is still too early to conclude that the broader uptrend has come to an end. What we have seen is a rapid repricing of interest-rate expectations rather than a fundamental shift in all the underlying factors that have supported gold in recent months. As a non-yielding asset, gold tends to become less attractive when expectations for interest rates and real yields rise, particularly when this is accompanied by a stronger U.S. dollar.
For this reason, I view the $4,400 area as an important psychological threshold at this stage. However, the more important question is whether sellers can keep gold firmly below this level, rather than simply pushing the price lower temporarily without sustained selling momentum.
The latest data have already increased expectations for a rate hike at the September meeting, with market pricing for a 25-basis-point increase rising to nearly 58% following the jobs report, compared with lower levels before the release. In my view, however, the market has partially overreacted to the speed of the repricing toward a more hawkish monetary-policy scenario.
The employment figures were undoubtedly strong, but the unemployment rate remained at 4.1%, while wage growth did not deliver an inflationary signal of the same intensity as the headline jobs figure. Therefore, I do not believe that a single report, regardless of how strong it is, can determine the Federal Reserve’s decision on its own, particularly with key inflation data approaching.
This is why the upcoming CPI and PPI reports will be the most important variables for gold in the days ahead. If inflation comes in hotter than expected, markets will have additional justification to raise interest-rate expectations. Treasury yields and the dollar could rise again, creating what I see as the most bearish short-term scenario for gold.
Conversely, if inflation data come in softer than expected, we could see a reduction in rate-hike expectations and a renewed decline in Treasury yields. In that case, gold could be well positioned to recover a significant portion of its recent losses. Recent price action has already demonstrated how sensitive the precious metal remains to U.S. economic data, as more moderate inflation readings in August helped ease rate-hike expectations and provided support for gold.
However, another factor makes me less inclined to adopt a long-term bearish view: geopolitics. Rising tensions in the Middle East, along with energy and maritime transportation risks, could support safe-haven demand. At the same time, however, they could create a more complicated environment for gold if they push higher and consequently increase inflationary pressures.
In other words, geopolitical risk is no longer automatically bullish for gold. If it evolves from a political risk into an inflationary shock, its indirect impact could instead favor the U.S. dollar and higher yields.
Against this backdrop, I believe gold is currently going through a repositioning phase rather than facing a confirmed bearish reversal. For me, the area around $4,400 represents a genuine test. Continued trading below this level, combined with stronger-than-expected inflation data, could open the door to a deeper correction. On the other hand, if sellers fail to push gold significantly below this area while Treasury yields decline or inflation data come in softer, buyers could return to the market relatively quickly.
Under the scenario I currently favor, I expect continued volatility and short-term pressure on gold, but I do not believe the fundamental picture has fully shifted into bearish territory. My view remains that any deep correction in gold could represent an opportunity to rebuild positions within the broader uptrend rather than necessarily marking the beginning of a new bearish cycle—unless we see a sustained shift in expectations for interest rates, real yields, and the U.S. dollar.
Therefore, I will be closely watching three key indicators in the coming period: U.S. inflation, the direction of , and gold’s price behavior around its current support levels. If softer inflation is accompanied by falling yields, I would view the current decline as a temporary correction. However, if inflation comes in stronger than expected and yields continue to rise, I would raise my level of caution and anticipate a further extension of the correction.
My conclusion is clear: Gold is not immune to further downside, but it has yet to provide sufficient evidence that the broader uptrend has ended. The real battle has begun around the $4,400 level, but the outcome of this battle is likely to be determined more by upcoming inflation data than by the latest jobs report.
In my view, gold’s ability to regain momentum following the CPI and PPI releases will be the most important signal in determining whether the current decline is simply a corrective move or the beginning of a more challenging phase for the precious metal.
