Gold rebounds above $4,450 as Waller tempers Fed rate hike bets ahead US jobs data

Gold price (XAU/USD) gains momentum to around $4,470 during the early Asian session on Friday. The precious metal extended its recovery as Federal Reserve (Fed) rate hike bets ease. All eyes will be on the US August Nonfarm Payrolls (NFP) report, which is due later on Friday. 

Earlier this week, hawkish remarks from Fed Chair Kevin Warsh at the Jackson Hole symposium drove expectations of a US September rate hike higher and weighed on the yellow metal. However, traders subsequently pared back their bets on further monetary tightening after Fed Governor Christopher Waller said he expects “reasonable” inflation readings next month.

Traders of Fed funds futures see a 50.2% chance of a quarter-point hike in September, down from 63.2% before Waller’s speech, according to the CME’s FedWatch tool.

“With the Fed currently offering no forward guidance, gold remains highly sensitive to shifts in market expectations for the September meeting,” said Saxo Bank Head of Commodity Strategy Ole Hansen. 

Traders will closely monitor the US jobs data for August later on Friday, which could offer fresh cues on the US interest rate path. The Nonfarm Payrolls (NFP) is expected to show a 56,000 job addition in August, while Unemployment Rate is projected to hold steady at 4.1% during the same period. If the report shows stronger-than-expected outcomes, this could lift the US Dollar (USD) and drag the USD-denominated commodity price lower. 

Waller keeps September options open as data-dependent stance tempers Dollar bulls

Fed Governor Waller delivered a moderately hawkish but data-contingent message, with the FXS Speechtracker score at 6.1 slightly softer relative to the historical average of 6.3. The key remark that Waller is inclined to support holding rates steady in September if August inflation shows continued progress, but would consider a hike if the data comes in hot, underscores a live-meeting, reaction-function focus that limits immediate repricing in the Dollar while preserving upside risk. Emphasis on emerging disinflation, solid GDP and a satisfactory labor market, alongside acknowledgment of upside inflation risks, keeps the tone cautiously hawkish rather than aggressively so.

The FXS Fed Sentiment Index fell by 2.06 points to 125.38, signaling a modest pullback in perceived hawkishness despite remaining firmly above the neutral 100 mark. This combination of a lower index reading and a still-elevated level indicates that, while Waller’s data-dependent stance has cooled some expectations compared to the established baseline, the overall policy tone remains in hawkish territory according to both the FXS Fed Sentiment Index and the FXS Speechtracker.

HSBC sees Fed on hold as core inflation remains contained

Analysts at HSBC argue that a further US rate increase is unlikely in the near term, provided that “high energy prices aren’t translating into higher core inflation.” They note that this “remains our base scenario,” stressing that the Fed will be reluctant to tighten policy further because “the US Federal Reserve won’t want low-income households to bear the pressure of higher rates.”

Technical Analysis: Gold price keeps a bullish vibe above the 100-day SMA

In the daily chart, XAU/USD holds a constructive near-term bias as it remains above the 100-day simple moving average (SMA) and the Bollinger Bands middle line, suggesting underlying demand after the latest pullback. The Relative Strength Index (RSI) at 55.34 sits in neutral-to-positive territory, hinting that bullish momentum has cooled from overbought readings but still favors mild upside rather than a deeper correction.

On the topside, immediate resistance is located at the Bollinger Bands upper band near $4,675, where any advance would likely meet profit-taking and volatility expansion. On the downside, initial support is seen at the Bollinger middle band at $4,460, followed by the 100-day SMA at $4,360, while a deeper decline could test the lower Bollinger band around $4,245.