【TMGM Financial Recap】 Surging Oil Prices And The Shadow Of Rate Hikes Have Pushed Gold Prices To Near Two-Week Lows; We Are Awaiting Friday's Nonfarm Payroll Data!
On Monday, spot gold prices fell 0.2%, hitting their lowest level since August 19. This move quickly drew market attention, and in the past month, gold has risen about 9.7% cumulatively, potentially recording the largest monthly gain since January. However, Federal Reserve Chair Walsh's hawkish remarks at the Jackson Hole symposium, combined with the renewed surge in oil prices from the US-Iran conflict, instantly shifted market sentiment. Investors began to reassess the interest rate path, putting short-term pressure on gold prices.
This correction is not an isolated event but the result of multiple intertwined factors. Rising interest rates and a rebound in inflation expectations have become the core forces suppressing gold prices. Rising energy prices and falling crude oil inventories have pushed up inflation expectations, U.S. Treasury yields continue to climb, and the dollar remains near a two-week high. These factors together create an unfavorable environment for gold, a non-yielding asset. Although the dollar's slight pullback has somewhat limited gold price declines, the overall sentiment has shifted from optimism to caution.
Meanwhile, the market is turning its attention to the upcoming U.S. employment data this week. The ADP employment report and nonfarm payroll data will be key windows to watch. Previously, July's employment data was unexpectedly weak, which at one point dampened expectations for a rate hike. Economists currently forecast about 55,000 new jobs in August. If the data continues to weaken, the Fed's justification for a rate hike will be significantly weakened; Conversely, if employment remains resilient, the September 15-16 policy meeting is more likely to send tightening signals. This high level of uncertainty makes gold prices particularly sensitive at the current level.
Another main thread of pressure on gold prices comes from the sudden escalation of the US-Iran conflict. On Sunday, US forces struck a launcher on Iran's Larak Island, marking the first known direct military action since late July. Iran then responded by launching missiles at US military bases in Jordan. President Trump publicly stated he would strike them hard and promised further action. As a result, crude oil prices surged more than 2.5% on Monday to a near-week high. The rebound in oil prices has made inflation even more complex, and if the rally continues, the market will demand higher risk compensation.
Notably, the Trump administration has simultaneously increased secondary sanctions on Iran and indicated it may use Venezuelan oil to replenish its strategic oil reserves. These measures may ease some supply concerns in the short term, but geopolitical risks themselves continue to support oil prices. Gold, as a traditional safe-haven asset, should theoretically benefit from escalating conflicts, but in the current environment dominated by interest rate expectations, the strength of safe-haven buyers has been significantly weakened. Investors are more concerned about whether high oil prices will force the Federal Reserve to adopt a tougher anti-inflation stance.
Market Insight:
Looking ahead, market attention is highly focused on U.S. employment data and subsequent Producer Price Index and Consumer Price Index reports. Employment data will directly influence the final pricing of the probability of a rate hike in September. If employment weakens and inflation eases, gold prices are likely to regain support; Conversely, if data shows both economic resilience and inflation stickiness, gold may further test support near the two-week low.
