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Gold prices climbed on Friday after plunging to a one-week low, as bargain hunters stepped in following a steep sell-off driven by stronger-than-expected U.S. employment data. The rebound comes at a critical moment for financial markets, with investors reassessing the Federal Reserve’s interest rate trajectory.

The recovery in precious metals underscores the tension between resilient economic growth and expectations for monetary easing, a dynamic that could shape market trends in the weeks ahead.

Gold Finds Support After Sharp Pullback

Spot gold rose 1% to $4,966.83 per ounce by 0127 GMT, bouncing back after sliding more than 3% in the previous session. On Thursday, bullion briefly fell below the psychologically significant $5,000 mark, a level closely watched by traders as a key support threshold.

U.S. gold futures for April delivery also moved higher, gaining 0.7% to $4,985.40 per ounce.

The rebound followed heavy selling pressure that accelerated once prices broke through technical support levels. Analysts say such sharp declines often trigger opportunistic buying, particularly among investors who see value in long-term holdings of the metal.

Silver mirrored gold’s recovery. Spot silver rose 2.1% to $76.76 per ounce after suffering an 11% drop earlier in the week. The metal’s volatility reflects its dual role as both a precious and industrial commodity, making it more sensitive to shifts in economic sentiment.

Dollar Stability Caps Upside

The U.S. dollar remained largely steady against major peers, holding firm after mixed signals from recent economic data releases. A stronger or stable dollar tends to weigh on gold and silver, which are priced in greenbacks, making them more expensive for holders of other currencies.

Currency markets have been closely tracking labor and inflation indicators for clues about how long the Federal Reserve might maintain its current policy stance.

U.S. Labor Market Surprises to the Upside

The latest employment data has been central to the recent turbulence in metals markets.

Figures released earlier this week showed the U.S. labor market began 2026 on firmer footing than many economists anticipated. Nonfarm payrolls increased by 130,000 jobs in January, following a downwardly revised 48,000 gain in December.

Meanwhile, the unemployment rate edged down to 4.3%, signaling continued resilience in hiring despite elevated borrowing costs.

Adding to the strength, initial jobless claims declined to 227,000 in the week ended February 7, pointing to steady labor demand.

Stronger labor data typically reduces the urgency for the Federal Reserve to cut interest rates. For gold, which offers no yield, higher rates diminish its relative appeal compared with interest-bearing assets like bonds.

Policy Debate Intensifies

Even as data paints a picture of economic resilience, debate within the Federal Reserve continues.

Federal Reserve Governor Stephen Miran said on Thursday that the current monetary policy setting could pose risks to economic growth. He argued that the economy is otherwise being supported by several Trump administration policies, including tax reductions, and reiterated the case for additional interest rate cuts.

His remarks highlight a growing divergence between policymakers weighing inflation risks and those concerned about longer-term growth momentum.

According to a Reuters report, investors are now recalibrating expectations around the pace and timing of potential rate reductions.

Inflation Data in Focus

Market participants are now turning their attention to a series of inflation readings due later Friday.

Key data points include:

• U.S. Core Consumer Price Index (CPI) month-over-month (January)

• U.S. Core CPI year-over-year

• Headline CPI month-over-month

• Headline CPI year-over-year

• CPI for wage earners

Additionally, Europe will release trade balance figures for December and a flash estimate of fourth-quarter GDP growth.

These indicators are expected to provide clearer guidance on whether inflationary pressures are cooling sufficiently to justify policy easing.

Platinum and Palladium Join the Recovery

Other precious metals also advanced.

Spot platinum rose 1.7% to $2,033.15 per ounce, while palladium climbed 1.4% to $1,639.99. Gains across the metals complex suggest that Friday’s movement was largely technical and sentiment-driven rather than tied to any single fundamental development.

However, both platinum and palladium remain sensitive to industrial demand trends, particularly in automotive manufacturing, where they are widely used in catalytic converters.

Why This Matters for Investors

The recent volatility highlights the delicate balance currently facing global markets.

Gold has surged in recent months amid geopolitical uncertainty, inflation concerns, and shifting central bank policies. Yet strong economic data complicates the narrative, as it reduces pressure on the Federal Reserve to deliver swift rate cuts.

For investors, the key question is whether economic resilience will continue, potentially delaying easing, or whether upcoming inflation data will tilt the balance toward monetary relief.

A sustained break below the $5,000 level could trigger additional technical selling, while signs of cooling inflation may reignite bullish momentum.

The Bigger Picture: Growth vs. Rates

At its core, the gold market is reacting to a broader macroeconomic tug-of-war.

On one side stands a labor market that continues to generate jobs and hold unemployment in check. On the other is the Federal Reserve’s mandate to control inflation without undermining growth.

If inflation remains stubborn, policymakers may feel compelled to maintain higher interest rates longer than markets currently anticipate. That scenario could cap gains in non-yielding assets such as gold.

Conversely, if inflation moderates meaningfully, expectations for rate cuts could return with force, potentially pushing bullion back toward recent highs.

Looking Ahead

As traders await fresh inflation data, markets are likely to remain volatile.

Gold’s rebound suggests buyers remain willing to step in during sharp pullbacks. However, sustained gains will depend on clearer signals from economic indicators and central bank communication.

For now, the precious metals market remains caught between strong economic data and hopes for policy easing, a balancing act that could define price action in the near term.

(With inputs from Reuters.)

 

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