Gold, silver rebound as Fed dovish bets soar

Gold clings to gains near Friday’s high around $3,350 during the European trading session on Monday. XAUUSD trades firmly as cooling labour market conditions have forced traders to raise bets supporting interest rate cuts by the Federal Reserve in the September meeting.

Lower interest rates by the Fed bode well for non-yielding assets, such as gold. Meanwhile, 10-year US Treasury yields trade vulnerably near almost three-month low around 4.20%.

The US NFP report showed on Friday that the economy added 73,000 fresh workers, significantly lower than estimates of 110,000. Also, employment figures for June were revised sharply lower to 14,000 from 147,000. The Unemployment Rate rose to 4.2%, as expected, from the prior release of 4.1%.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates in the September meeting has increased to 80.8%, from 41.2% seen on Thursday, a day before the release of the NFP data.

Before the US employment data, traders pared Fed’s interest rate cut bets for the September meeting significantly as Chairman Jerome Powell said in the press conference on Wednesday that there is no rush for interest rate cuts as the impact of tariffs announced by President Trump has started feeding into the economy.

Gold daily charts by TradingView

Silver (XAGUSD) is drawing support from a depressed US dollar and the recent decline in US Treasury yields to regain the $37.00 level, but the immediate trend remains bearish with the recent trend of lower highs and lower lows still intact.

The precious metal bounced up from multi-week lows at $36.20, as US employment data disappointed, triggering renewed concerns about a recession and boosting hopes that the Fed will be forced to focus on the softer labour market and cut interest rates sooner rather than later.

Silver daily charts by TradingView