XAU/USD edges higher to near $3,600 as weak NFP data fuel Fed rate cut bets

• Gold price drifts higher to around $3,590 in Monday’s early Asian session. 
• Weak jobs data have fueled Fed rate cut bets. 
• The Chinese central bank bought gold in August for the 10th consecutive month. 

The Gold price (XAU/USD) extends the rally to near $3,590 during the early Asian session on Monday. The precious metal edges higher near an all-time high as soft US jobs data further cemented expectations for a US Federal Reserve (Fed) rate cut later this month.

The US Nonfarm Payrolls (NFP) report on Friday showed a slowdown in hiring in August, while the Unemployment Rate rose to the highest level since 2021, confirming that labor market conditions in the world’s biggest economy are slumping. These reports boost Fed rate cut expectations, which provides some support to the precious metal price, as lower interest rates could reduce the opportunity cost of holding Gold. 

Following the data, traders are now almost certain that the Fed will lower rates at its upcoming meeting on September 17, with an 84% chance of it being a 25 basis points (bps) cut and a 16% possibility of a more aggressive 50 bps reduction. 

Additionally, rising demand from major central banks contributes to the upside. Official data showed on Sunday that the People’s Bank of China (PBoC) added gold to its reserves in August, extending purchases of bullion into a 10th straight month. China’s gold reserves stood at 74.02 million fine troy ounces at the end of August, up from 73.96 million at the end of July. 

Traders will take more cues from the US Producer Price Index (PPI) for August, which is due later on Wednesday. If the report shows hotter-than-expected outcomes, this could boost the US Dollar (USD) and weigh on the USD-denominated commodity price.