New Delhi: After slipping to a near one-week low, gold prices bounced back on Wednesday as investors seized the opportunity to buy at lower levels ahead of crucial U.S. employment data expected later in the day. The rebound came amid continued uncertainty surrounding U.S. monetary policy and a strong U.S. dollar, which has lately kept pressure on the precious metal.
Spot gold rose by nearly 0.8% to around US$3,961.85 per ounce in early Asian trading, recovering from a steep drop in the previous session when it hit its weakest level since October 30. U.S. gold futures also inched higher, trading at US$3,970.10 per ounce, indicating a cautious yet optimistic tone among traders after recent declines.
Analysts noted that the rebound largely stemmed from bargain hunting after the recent sell-off. “This appears to be an opportunistic move by traders who see value after the correction,” said a commodities analyst cited by Reuters. The slight uptick was also attributed to a modest rise in safe-haven demand, as investors prepared for possible market volatility tied to the upcoming U.S. employment data.
The U.S. dollar, however, remained near a three-month high, limiting gold’s upside momentum. A stronger greenback typically makes gold more expensive for buyers holding other currencies, reducing demand.
The key catalyst for the day’s trading sentiment was the anticipation of the U.S. private payrolls report from ADP. The data is expected to offer an early glimpse into the broader U.S. labor market performance, especially important now that several official data releases have been delayed due to the recent government shutdown.
Investors are watching closely because stronger employment data could bolster expectations that the Federal Reserve may pause further rate cuts or even consider a more neutral stance going forward. Last week, the Fed reduced interest rates but signaled that the move might be the final cut for the year, cooling expectations of continued monetary easing.
Market trackers now estimate a 69% chance of another rate cut in December, down from more than 90% just a week earlier. This shift in sentiment has led to mixed views on gold’s near-term trajectory.
Despite Wednesday’s recovery, gold remains about 10% below its record high of US$4,381.21 reached on October 20. The decline has been fueled by easing geopolitical tensions, firmer global equities, and the resurgence of the U.S. dollar.
Some analysts caution that the rebound might not sustain if the upcoming jobs report signals economic strength. A stronger-than-expected ADP print could push prices back toward US$3,900 per ounce, while weaker data could spark renewed buying interest.
Other precious metals followed a similar but milder pattern. Spot silver gained 1.2% to US$47.68 per ounce, platinum edged up 0.1% to US$1,537.10, and palladium rose 0.2% to US$1,394.75. The modest gains reflected broader caution ahead of U.S. macroeconomic indicators that could sway commodity markets globally.
In India, one of the world’s largest consumers of gold, the movement in global prices directly impacts local demand. With the festive season ongoing, a weaker international price could boost retail jewellery purchases and investment demand. However, the rupee’s performance against the dollar remains a crucial factor any depreciation in the local currency could offset global declines and keep domestic prices elevated.
For investors, the current phase presents a mixed opportunity. Those betting on short-term fluctuations may find value in tactical entries, while long-term investors could view the recent correction as a chance to accumulate gold at relatively lower prices.
The market’s next decisive cue will come from the U.S. labor report and subsequent Federal Reserve commentary. If economic data suggests that inflationary pressures are easing alongside moderate job growth, gold could regain its footing as an inflation hedge. However, any sign of economic resilience might strengthen the dollar further and cap gold’s upside potential.
For now, the metal’s rebound offers a temporary respite after a volatile fortnight, reminding traders that gold remains highly sensitive to shifts in global economic confidence and monetary policy expectations.