Gold Prices Dip as Traders Await Key Labor Market Data

Gold prices edged lower in early trading on Tuesday as market participants focused on the upcoming U.S. labor market data, which is expected to influence the Federal Reserve’s decision on potential interest rate cuts in September.

As of 00:08 EST (04:08 GMT), spot gold was down 0.24%, trading at $2,425.55 an ounce. This decline follows a strong performance in August, where gold prices reached a record high of $2,531.60 on August 20. However, the attention has now shifted to the U.S. non-farm payroll report due on Friday, which is expected to play a critical role in shaping the Fed’s next move.

The labor market data for August is considered crucial in determining whether the Fed will opt for a 25 or 50 basis point cut in interest rates at its September meeting. According to the CME FedWatch tool, traders currently estimate a 69% probability of a 25-basis-point cut, with the chances of a more substantial 50-basis-point reduction dropping to 31%.

In the meantime, demand for physical gold has remained subdued in major Asian markets, as new import quotas have not led to the anticipated increase in Chinese demand. This lackluster demand in Asia has further weighed on gold prices.

With the Federal Reserve’s upcoming decision heavily dependent on the labor market’s performance, traders and investors are keenly watching the release of the non-farm payroll data, which could set the tone for gold prices in the near term.

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