Last week, Fed Chairman Powell said the Fed could start cutting back on asset purchases if the labor market continues to rise. However, caution should be exercised over raising interest rates, Reuters reported.
“The quick reaction was positive for gold, as the failure to meet the targets effectively ruled out the possibility of a cutback in the buybacks in September,” said Ed Moya of OANDA. Some investors see gold as a hedge against stimulus-driven inflation, while lower interest rates reduce the opportunity cost of holding the bullion.
"Next, the market's attention will shift to the September FOMC meeting," said analyst Suki Cooper of Standard Chartered Bank. "We would like to see further gains in gold, given our expectation that the US dollar is weakening and real yields remain strongly negative."