On Friday, the Gold price came under pressure following the publication of surprisingly robust US labour market data. The price fell back to just over $2,630 per troy ounce before recovering somewhat, Commerzbank’s commodity analyst Carsten Fritsch notes.

Uncertainty fuels demand for Gold as a safe haven

“The US labour market report showed a much stronger than expected increase in jobs created in September. In addition, the number of new jobs in the previous two months was revised upwards significantly. At the same time, the unemployment rate fell and average hourly earnings rose sharply. As a result, Fed rate cut expectations were scaled back sharply.”

“According to Fed fund futures, market participants now expect interest rates to be cut by only 25 basis points in both November and December. This is 25 basis points less than previously expected by the end of the year and corresponds to the Fed's and our economists' expectations. The fact that the Gold price has not corrected more sharply is probably due to the conflict between Israel and Iran. The uncertainty about this is fuelling demand for Gold as a safe haven.”

“This can be seen from the ETF inflows of almost nine tons since last Wednesday. Thus, Gold is currently being pulled in different directions by opposing factors. The US inflation data to be released on Thursday is likely to show a further decline in price pressure, but is unlikely to trigger renewed speculation of stronger Fed rate cuts. Therefore, higher Gold prices are likely to be primarily driven by geopolitical risks.”