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Gold Futures edged slightly lower Friday, but the precious metal continues to hover near multi-month highs as investors weigh signs of economic weakness against expectations of monetary easing. The resilience in gold prices reflects a growing consensus that the Federal Reserve faces a difficult policy dilemma—one that could further elevate the metal’s safe-haven allure.
At last check, gold futures were down 0.2% at $3,428.20 a troy ounce, paring back earlier losses. Still, the metal is on track for a 3.1% weekly gain, powered by disappointing U.S. economic data and rising concerns about stagflation.
The catalyst for the week’s rally was Friday’s Nonfarm Payrolls report, which showed a weaker-than-expected gain of just 73,000 jobs. Compounding the softness were major downward revisions to previous months, suggesting that the labor market is less robust than initially thought. That release jolted expectations for future rate cuts by the Federal Reserve and sent yields lower—conditions typically favorable for gold, which yields no interest.
Further supporting bullion’s rise was Tuesday’s ISM Services report, which painted a troubling picture of the U.S. economy. While prices paid surged, signaling renewed inflation pressure, key measures of growth such as business activity and new orders deteriorated. The resulting divergence stoked fears of stagflation—a scenario of stagnant growth and rising inflation that has historically been bullish for gold.
“Now the Federal Reserve must cut interest rates and risk reigniting inflation, or hold steady and risk deepening the slowdown,” said Russel Shor, market strategist at Tradu.com. “Either way, gold shines.”
That view is increasingly shared among market participants, with the yellow metal benefiting from its dual role as both an inflation hedge and a defensive asset during economic downturns.
Looking ahead, traders will likely focus on the Fed’s next move—particularly any signs that policymakers are leaning toward a more dovish stance in light of recent data. Should the central bank signal openness to cutting rates, gold could extend its gains. Conversely, if the Fed remains hawkish to curb lingering price pressures, bullion may face headwinds.
But for now, with real yields retreating and growth signals weakening, the path of least resistance for gold appears upward.