• Gold trades up and down within a range under its record highs. 
• US labor market data caused some volatile moves, but the sideways trend holds. 
• US inflation data this week could impact Gold as the next Federal Reserve meeting nears. 

Gold (XAU/USD) pulls back down to just below $2,500 per troy ounce on Monday after retesting its all-time highs on Friday, amid market volatility following the release of a mixed US Nonfarm Payrolls (NFP) employment report. 

Gold rises then falls after US Nonfarm Payrolls

Gold rose immediately after the NFP release on Friday, as the headline figure showed the US economy added fewer jobs than expected in August, and July and June’s figures were revised down. The data indicated that the labor market was softening overall and that, therefore, there was a greater chance the Federal Reserve (Fed) would need to make a larger 0.50% cut to interest rates rather than the standard 0.25% in September. Lower interest rates are positive for Gold as they reduce the opportunity cost of holding non-interest-bearing assets. 

The precious metal failed to hold its gains, however, as traders processed the rest of the data in the report and its implications for interest rates going forward. The Unemployment Rate, for example, was shown to have actually fallen to 4.2% from 4.3% as anticipated, and wage growth increased by 0.4% in the month, exceeding the forecasted 0.3%. This suggested the labor market was not in as bad shape as first thought and that wage inflation was rising. As a result of the report, the market-based probabilities of the Fed cutting interest rates by 0.50% actually ended up falling from around 40% to about 30%.