Dollar Stabilizes After Friday’s Jobs Data Shock Triggers 90% Fed Cut Odds

Citi has raised its three-month gold price target to $3,500 per ounce from $3,300, citing deteriorating US economic conditions and inflation concerns. The bank expects gold to trade between $3,300-$3,600 as Trump’s new tariffs on dozens of countries, weak labor data showing only 73,000 jobs added in July, and a weakening dollar create favorable conditions for the precious metal. With markets now pricing an 81% chance of a September Fed rate cut and growing concerns about institutional credibility, gold demand has surged by over one-third since mid-2022, nearly doubling prices.

Oil prices fell over 1% Monday after OPEC+ confirmed it will increase production by 547,000 barrels per day in September, continuing its strategy to regain market share. Brent crude dropped to $68.82 and WTI to $66.51 per barrel. The move reverses OPEC+’s previous cuts of 2.5 million barrels per day. Meanwhile, markets remain nervous about President Trump’s threat of 100% secondary tariffs on Russian oil buyers, which could impact 1.7 million barrels per day of supply, though India has indicated it will continue purchasing Russian crude despite the warnings.

Federal Reserve Governor Adriana Kugler’s unexpected resignation on Friday gives President Trump an immediate opportunity to influence Fed policy and potentially accelerate his selection of the next Fed chair. The resignation comes amid intense White House pressure on the central bank, with Trump calling current Fed Chair Jerome Powell “TOO ANGRY, TOO STUPID, & TOO POLITICAL” for refusing to cut interest rates. While Trump can now appoint a replacement who favors lower rates, one additional vote is unlikely to sway Fed policy, as this week’s 9-2 vote to keep rates unchanged shows the challenge of shifting the committee’s stance.

Switzerland’s massive gold refining industry has become a key factor in US-Swiss trade relations after President Trump imposed 39% tariffs on Swiss imports. The country processes billions in gold annually, with bullion exports to the US reaching over $36 billion in Q1 2024—representing two-thirds of Switzerland’s trade surplus with America. Despite handling vast sums, Swiss refiners only capture a few dollars per ounce for recasting gold bars. While gold is now exempt from the tariffs, the precious metal’s flows continue to significantly impact trade balance calculations between the two nations.

Gold prices dipped slightly on Monday after last week’s strong rally, falling 0.2% to $3,356.91 per ounce. The decline came as U.S. Treasury yields rose and investors took profits following Friday’s 2% surge. Despite the pullback, market sentiment remains bullish due to weak U.S. jobs data that increased expectations for a Federal Reserve rate cut in September. Investment bank Citi raised its three-month gold price target to $3,500 per ounce, citing concerns about U.S. economic growth.