Forex News
- Gold reverses from $4,227 despite sharply weaker US payrolls.
- October Fed hold odds rise as US Unemployment reaches 4.2%.
- The 10-year yield near 5.29% keeps non-yielding Bullion under pressure.
Gold prices dropped on Friday, with the yellow metal struggling to decisively break the $4,200 milestone. The precious metal is down nearly 1% as US Treasury yields edge higher following a less-than-stellar US employment report. The XAU/USD trades at $4,138 after peaking at $4,227 earlier in the session.
XAU/USD retreats as elevated Treasury yields overwhelm softer US jobs data
US Nonfarm Payrolls in September were well below estimates of 90K, coming at just 29K, shy of August’s downwardly revised figure of 133K. This pushed the Unemployment Rate from 4.1% to 4.2%, a tenth up on the Federal Reserve’s (Fed) projections for 2026 and 2027, but it is attributed to an increase in the participation rate.
US jobs data and dovish comments from New York Fed President John Williams and Vice Chair Philip Jefferson, who said they’re not in a rush to raise rates, raised the potential for an October skip, followed by a rate hike in December.
Money markets now expect a hold at the October 28 meeting, according to Prime Terminal. The odds stand at nearly 77% for a hold. However, for the December meeting, the chances are increasing to 88%.
Bullion failed to rally even though the Greenback is losing its safe-haven appeal. The US Dollar Index (DXY), which tracks the performance of the buck against six currencies, is down 0.14% at 101.89.
US Treasury yields remain moderately high with the US 10-year T-note yielding 5.9%, up 4 basis points, making Gold less appealing due to its non-yielding nature.
Meanwhile, light news from the Middle East is keeping energy prices depressed. Reports that Europe may release diesel and Crude from its reserves pushed West Texas Intermediate (WTI), the US Crude benchmark, down 1.6% to $91.42.
Next week, the US economic docket will feature the ISM Services PMI, jobs data, the release of the Federal Open Market Committee (FOMC) Meeting Minutes from its last meeting, a speech by Fed Governor Bowman, and the University of Michigan Consumer Sentiment.
XAU/USD technical analysis: $4,200 is Gold kryptonite, tumbles below $4,150
Struggling to decisively clear the $4,200 mark despite reaching a daily high of $4,227 opens the door for further downside.
The Relative Strength Index (RSI) shows that sellers are in charge with the index remaining below its 50-neutral level.
The XAU/USD first support is the $4,100 milestone. If sellers clear the latter, a move toward the July 29 low of the day (LOD) is likely at $3,996, with the next area of interest to the downside being the July 17 low of $3,959.
On the upside, buyers must reclaim $4,200 to have a chance of challenging the 100-day Simple Moving Average (SMA) at $4,279.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Chicago Federal Reserve (Fed) President Austan Goolsbee said in an interview with Fox Business that the labor market is steady and that “the inflation side of the Fed’s job is more important.”
Goolsbee said he is open to seeing if there’s evidence that prices are moving toward the Fed’s 2% goal and that he “won’t rule out any decision at the next rate meeting.”
Key highlights:
Labor market is steady, the inflation side of the fed's job is more important
Plenty of room for anything on the table as far as rate hike or pause
Open to seeing if we get evidence we are heading back to 2% inflation
Won't react strongly to one month of data
Won't rule out any decision at the next rate meeting
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.32% | -0.16% | 0.24% | -0.27% | -0.09% | -0.23% | |
| EUR | 0.10% | -0.21% | -0.07% | 0.34% | -0.16% | 0.03% | -0.12% | |
| GBP | 0.32% | 0.21% | 0.17% | 0.55% | 0.06% | 0.24% | 0.09% | |
| JPY | 0.16% | 0.07% | -0.17% | 0.41% | -0.11% | 0.07% | -0.06% | |
| CAD | -0.24% | -0.34% | -0.55% | -0.41% | -0.52% | -0.34% | -0.47% | |
| AUD | 0.27% | 0.16% | -0.06% | 0.11% | 0.52% | 0.18% | 0.05% | |
| NZD | 0.09% | -0.03% | -0.24% | -0.07% | 0.34% | -0.18% | -0.13% | |
| CHF | 0.23% | 0.12% | -0.09% | 0.06% | 0.47% | -0.05% | 0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- NZD/USD advances on Friday, supported by broad US Dollar weakness after job creation fell well short of expectations.
- Downward revisions to previous months and slower wage growth reinforce signs of weakness in the US labor market.
- A tightening election race in New Zealand ahead of the November 7 vote fuels political uncertainty and limits the Kiwi’s gains.
NZD/USD advances on Friday and trades around 0.5610 at the time of writing, up 0.12% on the day. The New Zealand Dollar (NZD) benefits mainly from the decline in the US Dollar (USD), which comes under pressure following a significantly weaker-than-expected employment report. However, concerns surrounding the New Zealand election limit the Kiwi’s bullish momentum.
The United States (US) Bureau of Labor Statistics (BLS) reported on Friday that Nonfarm Payrolls (NFP) increased by only 29K in September, well below market expectations of 90K. Revisions to previous months further highlight the weakness of the report. August job creation was revised down to 133K from the 162K initially reported, while July now shows a decline of 10K jobs compared with a previously estimated increase of 21K. Overall, employment gains in July and August were revised down by a combined 60K.
Other components of the report also offer little support to the Greenback. The Unemployment Rate edged higher to 4.2%, while the Labor Force Participation Rate rose to 61.8% from 61.6% previously. Meanwhile, Average Hourly Earnings increased 3% YoY, below the 3.2% expected, easing concerns over wage-driven inflationary pressures.
The US Dollar reacts negatively to the release. The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six major currencies, falls by 0.11% on Friday to trade near 101.90 at the time of press.
The employment report also triggered an adjustment in expectations surrounding the Federal Reserve’s (Fed) next monetary policy decision. According to the CME FedWatch tool, markets now assign around a 22% chance to an interest rate hike in October, down from roughly 64% a week earlier.
This shift follows another batch of softer US economic data. Thursday’s weaker-than-expected Personal Consumption Expenditures (PCE) inflation figures had already reduced expectations of further monetary tightening in October. Friday’s labor market weakness adds to signs that the US economy is losing momentum, further reducing the case for an immediate rate hike. Markets nevertheless retain an approximately 67% chance of a rate increase in December, according to the CME FedWatch tool.
On the New Zealand side, political uncertainty acts as a headwind for the NZD. Ahead of the November 7 election, opinion polls indicate a tight race and the possibility that New Zealand Prime Minister Christopher Luxon’s coalition could lose power. A change in government could result in several shifts in economic policy, including changes to the central bank’s mandate.
New Zealand’s Labour Party has indicated that it would restore the dual mandate of the Reserve Bank of New Zealand (RBNZ), after Christopher Luxon’s government refocused its mandate on price stability. The prospect of changes to the monetary policy framework therefore adds another source of uncertainty for the New Zealand Dollar ahead of the election.
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.27% | -0.21% | 0.23% | -0.31% | -0.12% | -0.26% | |
| EUR | 0.11% | -0.16% | -0.09% | 0.30% | -0.17% | 0.02% | -0.15% | |
| GBP | 0.27% | 0.16% | 0.08% | 0.46% | -0.03% | 0.15% | 0.00% | |
| JPY | 0.21% | 0.09% | -0.08% | 0.43% | -0.11% | 0.07% | -0.06% | |
| CAD | -0.23% | -0.30% | -0.46% | -0.43% | -0.54% | -0.37% | -0.50% | |
| AUD | 0.31% | 0.17% | 0.03% | 0.11% | 0.54% | 0.19% | 0.05% | |
| NZD | 0.12% | -0.02% | -0.15% | -0.07% | 0.37% | -0.19% | -0.13% | |
| CHF | 0.26% | 0.15% | -0.01% | 0.06% | 0.50% | -0.05% | 0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
- DXY drops through 102.00 to a session low under 101.70 after US payrolls miss.
- US employers add 29K jobs in September, about a third of the 90K forecast.
US employers added 29K jobs in September against a forecast of 90K, and July and August were revised down by a combined 60K. The unemployment rate rose to 4.2%, and hourly pay grew 3.0% over the year against a 3.2% forecast.
Traders now see about a one-in-five chance of another rate hike on October 28, and the two-year Treasury yield, which moves most with Fed expectations, fell. The Dollar fell on a first estimate, and backward revisions have dragged July and August down into net loss territory. A lower US yield means less extra interest for holding Dollars over Euros, which make up 57.6% of the Dollar Index.
On the charts
The Dollar Index had climbed to just above 102.10, near the day's high, in the bars before the release. In the release bar, it fell from 102.00 to the 101.80 area, back to where that climb started. A bounce stalled short of 102.00, the level it broke above on Thursday, and a second leg lower reached the day's low just under 101.70. The index has since recovered to near 101.90, the middle of the day's range.
DXY 5-minute chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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