Gold shines brighter after US NFP report

Today’s headlines

What’s happening: Gold prices rose sharply as investors assessed the latest nonfarm payrolls (NFP) data from the US.

What happened: Weaker-than-expected jobs data for July triggered speculations of interest rate cuts by the Federal Reserve.

Fresh tariff-related announcements by US President Donald Trump also boosted demand for the safe-haven bullion.

Why it matters: The Labor Department’s Bureau of Labor Statistics released its NFP report that showed weaker-than-projected job growth in July. Nonfarm payrolls rose by 73,000 in July, following a 14,000 gain in the previous month. Markets were expecting job growth of 110,000 last month.

The US unemployment rate edged higher to 4.2% in July, from 4.1% in the previous month, in-line with market estimates. Average hourly earnings for all employees on private nonfarm payrolls climbed by 0.3% to $36.44 in July, compared to June’s 0.2% gain.

The latest data followed stronger-than-expected PCE inflation, highlighting persistent pricing pressures and complicated the Federal Reserve’s policy decision.

Last week, the Federal Reserve had kept its benchmark interest rates unchanged in the 4.25%-4.50% range. The Fed Chairman Jerome Powell said that no decision had been made about September.

Investors widely expect two rate cuts by yearend, starting next month. Being a non-yielding asset, gold generally rises in a low-rate environment.

Donald Trump announced higher tariffs on exports from several trading partners, including Canada, India and Brazil, which weighed on global markets, lending further support to the safe-haven gold, which performs well amid economic and geopolitical uncertainty.

Weakness in the US dollar also provided a further boost to gold prices as a lower greenback makes metals cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 1.3% to 98.69 on Friday.

US gold futures gained 1.5% to settle at $3,399.80 an ounce on Friday. The yellow metal ended the week with gains. Gold extended gains this morning, with prices rising around 0.1%.

In other metals trading, silver prices also rose to $36.929 an ounce on Friday, while copper surged to $4.4355, platinum settled at $1,316.9 and palladium closed at $1,218.10.

What to watch: Investors will continue monitoring tariff-related announcements by Donald Trump, which are expected to significantly impact gold prices ahead.

The markets today

European stocks in focus today ahead of a basket of major economic reports.

Context: Equity markets in the Eurozone settled lower on Friday following the latest US tariff announcements.

Details: Investors shorted riskier assets and bought safe havens after Trump announced fresh tariff rates, while maintaining a minimum global tariff of 10%. Key rates include 50% for Brazil, 35% on Canadian goods, 39% on Switzerland and 25% on India.

On the domestic data front, Eurozone’s consumer price inflation came in unchanged from June at 2.0% year-over-year in July, but slightly higher than market estimates of 1.9%. The HCOB Eurozone manufacturing PMI edged higher to 49.8 in July, from 49.5 in the previous month, signalling the slowest contraction in the manufacturing sector since July 2022.

The STOXX Europe 600 Index fell 1.89% to close at 535.79 on Friday, logging its biggest one-week decline since early April. London’s FTSE 100 fell 0.7% to 9,068.58, while Germany’s DAX 40 and France’s CAC 40 lost 2.66% and 2.91%, respectively.

Banks, which had gained sharply earlier last week, fell around 3.4%. This was their steepest single-day decline since early April. Shares of pharmaceutical companies also came under pressure after Trump sent letters to 17 companies for lower prices.

Italy’s Campari was a bright spot on Friday, with shares gaining around 8% after the company posted higher operating profits for the second quarter.

What to watch: Data on HCOB services PMI (1155 UAE Time), HCOB composite PMI (1200 UAE Time) and PPI (1300 UAE Time), due to be released on Tuesday, will remain in focus. The HCOB Eurozone composite PMI is expected to surge to 51 in July, from 50.6 in the previous month, while services PMI is projected to rise to 51.2 in July. The Eurozone’s industrial producer prices, which declined by 0.6% in May, are expected to rise by 0.9% in June.

Tariff-related announcements from Trump will also be in focus.

Other Markets: US trading indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.23%, 1.60% and 1.96%, respectively.

The news shaping the markets

A Ukrainian drone attack started a massive fire at an oil depot in Sochi in southern Russia. The news sent the RUB/USD lower in forex trading this morning.

Turkey posted a trade deficit of $6.4 billion for July. This being lower than the deficit of $7.3 billion in the same month last year supported the TRY/USD forex pair.

The US reported that the ISM Manufacturing PMI fell to 48 in July, from 49 in the previous month, coming in short of expectations for an improvement to 49.5. This being the fifth consecutive month of contraction in the manufacturing sector sent the US stock indices lower on Friday.

Colombia’s Davivienda manufacturing PMI surged to 51.9 in July, from 51 in the previous month, which lent support to the COP/USD forex pair.

Australia’s Monthly Inflation Gauge rose 0.9% in July, following a modest 0.1% gain in the previous month. However, the AUD/USD pair rose in forex trading this morning.

What else to watch today

Brazil’s IPC-Fipe inflation (1200 UAE Time), Mexico’s consumer confidence (1600 UAE Time), France’s 12-month BTF auction (1700 UAE Time), 3-month BTF auction (1700 UAE Time) and 6-month BTF auction (1700 UAE Time), as well as US factory orders (1800 UAE Time), 3-month Bill auction (1930 UAE Time) and 6-month Bill auction (1930 UAE Time).