Gold prices steady after weekly slide as weak jobs data ease Fed hike bets
October 5, 2026
Gold prices edged higher on Monday after suffering a sharp weekly decline, as weaker-than-expected U.S. jobs data reduced expectations for another Federal Reserve interest rate hike. However, elevated U.S. Treasury yields and rising oil prices continued to limit gains in the gold market.
Spot gold XAU/USD rose around 0.4% to approximately $4,158.60 per ounce, while gold futures gained about 0.6% to $4,188.32. The modest recovery comes after gold experienced its steepest weekly decline since June, highlighting continued volatility across the precious metals market.
Weak U.S. Jobs Data Supports Gold Prices
The latest U.S. employment report showed that nonfarm payrolls increased by only 29,000 in September, significantly below market expectations. The weaker-than-expected jobs data reduced concerns that the Federal Reserve would need to raise interest rates again in the near term.
Markets are now pricing in roughly a 20% probability of an October Fed rate hike, down sharply from around 70% just one week earlier.
This shift in Federal Reserve interest rate expectations has provided some support for gold prices. Because gold does not generate interest income, higher interest rates and rising bond yields generally reduce its attractiveness compared with interest-bearing assets.
The latest labor-market weakness therefore represents a potentially bullish factor for gold prices and XAU/USD, particularly if additional U.S. economic data continues to show signs of slowing growth.
Gold Faces Pressure From Treasury Yields and Inflation
Despite the weaker jobs report, gold's recovery remains limited by elevated U.S. Treasury yields. Higher bond yields increase the opportunity cost of holding non-yielding assets such as gold.
The precious metal also remains under pressure from renewed inflation concerns, particularly as crude oil prices continue to rise amid increasing geopolitical tensions in the Middle East.
Gold declined more than 6% in September, marking its sharpest monthly fall since June. Investors have been concerned that higher energy prices could keep inflation elevated and force central banks, including the Federal Reserve, to maintain restrictive monetary policy for longer.
Rising Oil Prices Add to the Inflation Outlook
Oil prices have strengthened as tensions in the Middle East continue to develop. In Yemen, Saudi-backed forces launched an operation targeting areas controlled by Iran-backed Houthi forces.
A sustained increase in crude oil prices could create additional inflationary pressure by raising transportation, production and energy costs.
For financial markets, this creates a complicated environment for gold and other precious metals. Weaker employment data supports expectations for easier monetary policy, while higher energy prices could keep inflation elevated and delay potential Federal Reserve rate cuts.
Federal Reserve Minutes Could Drive Gold Market Volatility
Investors are now looking ahead to the release of the Federal Reserve's September meeting minutes, expected later this week.
The minutes could provide fresh clues about the Fed's outlook for interest rates, inflation, economic growth and monetary policy. Traders will closely examine policymakers' comments for signals about whether another rate increase remains possible or whether weaker economic conditions are becoming a larger concern.
Any indication of a less hawkish Federal Reserve could support gold prices, XAU/USD and precious metals, while a stronger commitment to fighting inflation could increase Treasury yields and weigh on bullion.
Gold Price Forecast: Key Factors to Watch
The near-term gold price forecast remains highly dependent on several major market drivers:
Federal Reserve interest rate expectations
U.S. nonfarm payrolls and employment data
U.S. inflation and economic indicators
10-year Treasury yields
U.S. dollar strength
Crude oil and energy prices
Middle East geopolitical tensions
Central bank monetary policy
Investor demand for safe-haven assets
If U.S. economic data continues to weaken and expectations for additional Fed rate hikes decline, gold could find renewed buying interest. However, persistent inflation, elevated Treasury yields and stronger oil prices could continue to restrict the upside.
Market Outlook
For now, gold prices remain caught between opposing forces. Weak U.S. employment data and reduced expectations for an October Federal Reserve rate hike are providing support for bullion, while high Treasury yields and renewed oil-driven inflation risks are keeping buyers cautious.
Traders will be watching the upcoming Fed meeting minutes and additional U.S. economic data for confirmation of the next major direction in XAU/USD and the global gold market.