“Traders are looking for a clearer direction, and all eyes are on the upcoming US employment report, which could serve as the next major catalyst for gold prices,” stated Mark Ashford, senior market analyst at Global Commodities. “The dollar’s strength has been a major headwind for gold.”

US Dollar Rises on Strong Labor Market Data

The US dollar has been gaining ground, nearing a one-month high, as recent economic indicators paint a picture of a stable labor market. According to the US Department of Labor, unemployment claims rose slightly to 225,000 for the week ending September 28, up from 218,000 in the prior week.

Meanwhile, private-sector employment saw an unexpected increase in job openings for August, reinforcing the strength of the US labor market.

Additionally, the Institute for Supply Management (ISM) reported that its Non-Manufacturing PMI rose to 54.9 in September, its highest reading since February 2023.

The robust labor market data has tempered expectations for significant Fed rate cuts, further supporting the US dollar and creating headwinds for non-yielding assets like gold.

Geopolitical Tensions Provide Limited Support for Gold Prices

While gold’s safe-haven appeal is being reinforced by the uncertain geopolitical landscape, this has not yet been enough to push prices higher. Hezbollah’s recent launch of 230 projectiles from Lebanon into Israel and retaliatory Israeli airstrikes have heightened the risk of a broader regional conflict.