On Friday morning (February 7th), spot gold fluctuated narrowly in the Asian market, currently trading at $2857.65 per ounce. Gold prices fell 1% to around $2834.08 per ounce on Thursday as the US dollar rebounded ahead of the release of a key employment report and investors took profits. The previous five trading days saw gold prices reach record highs due to the escalation of trade tensions between China and the United States. However, gold prices were still supported by bargain hunting, and the decline in gold prices narrowed at the end of Thursday, closing around $2855.81 per ounce.

Daniel Pavilonis, Senior Market Strategist at RJO Futures, said, "Prior to the release of the US employment report, the rebound of the US dollar, some profit taking, and a slight rebound in yields from low levels may have put pressure on gold

A Reuters survey of economists shows that after a significant increase of 256000 non farm jobs in December, there may be an increase of 170000 in January, and the unemployment rate is expected to remain unchanged at 4.1%.

A resilient labor market is driving economic growth and allowing the Federal Reserve to pause interest rate cuts when assessing the impact of Trump's fiscal, trade, and immigration policies on inflation.

Chicago Fed President Goolsby said that the economy is in a state of full employment, steady growth, and declining inflation, which will create conditions for the Fed to continue cutting interest rates. However, the uncertainty of the impact of tariffs and other policy changes has forced the Fed to slow down its pace of action.

Dallas Fed President Logan hinted that a cooling labor market is a prerequisite for the Fed to cut interest rates. As long as there is no recession in the labor market, even if inflation falls close to the Fed's 2% target, she is prepared to remain inactive for a considerable period of time.

However, the number of initial jobless claims in the United States increased last week, and the decline in labor productivity growth in the fourth quarter exceeded expectations

The number of initial jobless claims in the United States increased by 11000 last week, to 219000 seasonally adjusted, which is consistent with the steady slowdown in the labor market, despite job opportunities for the unemployed becoming increasingly scarce due to tepid recruitment.

The annualized growth rate of non farm productivity (measuring output per worker per hour) in the fourth quarter of the United States slowed down from 2.3% in the previous quarter to 1.2%, and economists had previously predicted a productivity increase of 1.4%.

The US dollar index rose 0.4% to 108.10 on Thursday, narrowing its gains after initial data was released and closing around 107.70.

From a technical perspective, a relative strength index (RSI) for gold above 70 indicates an overbought state.

Meanwhile, Deputy Governor of the Bank of England, Ramsden, stated that the central bank's gold inventory has decreased by approximately 2% since the end of last year, and there is strong demand for gold stored at the central bank to take advantage of international price differentials.

The yield of US treasury bond bonds rose slightly on Thursday, recovering from the sharp decline of the previous trading day. The US temporarily avoided a disastrous trade war with Canada and Mexico, and the bond market stabilized slightly. In late Thursday trading, the yield on the benchmark 10-year treasury bond bond rose to 4.438%, up 1.8 basis points.

The Bank of England cut interest rates by 25 basis points on Thursday, still providing support for gold prices as the opportunity cost for UK investors to hold gold decreases.

The Bank of England has lowered its benchmark interest rate by 25 basis points, and some policymakers hope to offset the impact of the economic slowdown with a larger rate cut. However, the Bank of England has stated that it will proceed with caution in further rate cuts as it expects inflation to rise and the global economy to be full of uncertainty.

Bank of England Governor Bailey said that the general direction of inflation is still downward, and he expects further interest rate cuts, "but we must assess the magnitude and speed of the rate cuts in each meeting. The central bank has also lowered its economic growth forecast for 2025 by half to 0.75%, and slightly raised its growth forecast for 2026 and 2027 from 1.25% to 1.5%.

Investors still need to keep an eye on the latest developments related to Trump.

A report from the Federal Reserve Bank of Boston shows that the comprehensive tariffs sought by the Trump administration will bring significant upward pressure to already high inflation. The Federal Reserve expects inflationary pressures to gradually ease, but tariffs will lead to price increases for American consumers, which poses significant uncertainty on the impact on inflation data.

Goldman Sachs held its forecast for gold prices to reach $3000 per ounce in the second quarter of 2026 on Thursday, but expects a temporary decline in gold prices if US tariff uncertainty subsides and market positions return to normal.

Goldman Sachs' forecast is based on the expectation that the Federal Reserve will cut interest rates, the central bank will continue to purchase gold, and the holdings of gold ETFs will gradually increase. Goldman Sachs stated, "We believe that the increasing policy uncertainty in the United States, as well as the hedging needs of central banks and investors, pose an upward risk to the gold price target of $3000 per ounce

Goldman Sachs also warned that if the United States imposes a 10% tariff on gold, the futures to physical (EFP) spread between New York COMEX futures and London spot gold prices may widen.

In addition to the non farm payroll report, this trading day also needs to pay attention to the initial value of the University of Michigan Consumer Confidence Index in February, as well as speeches by Federal Reserve Board members Bauman and Kugler.

Daily chart of spot gold