Gold Holds Steady in Thin Labor Day Trade as CPI and PPI Loom

The main source of pressure remained the U.S. labor market. August payroll growth accelerated sharply while the unemployment rate held at 4.1%, reinforcing expectations that the Federal Reserve could raise interest rates at its September 15–16 meeting.

Markets now price in approximately a 60% probability of a September rate hike, up from around 50% before Friday's employment report. This represents a continued shift toward tighter monetary policy and remains a headwind for non-yielding assets such as gold.

The impact of the jobs report was also reflected in the bond market. Higher expectations for a rate hike pushed Treasury yields higher, reducing the relative attractiveness of gold compared with interest-bearing assets.

At the same time, the U.S. dollar remained an important factor. A stronger dollar makes dollar-denominated gold more expensive for international buyers, adding further pressure to bullion prices. However, with U.S. markets closed, currency and gold trading volumes were relatively subdued.

Energy markets are another potential source of pressure. Oil prices moved higher following a weekend exchange of strikes on shipping, while Iran announced plans for a new restricted zone in the Gulf and a shipping corridor through the Strait of Hormuz. Higher oil prices can increase inflation concerns, potentially strengthening the case for tighter monetary policy.

Technically, gold found buying interest below $4,400, while resistance remained above $4,500. Key support was identified around $4,320. The ability of gold to hold above $4,400 could therefore be important for determining whether the recent decline stabilizes or extends toward the next support level.