Non-farm payrolls data exceeds expectations, supporting the US dollar; next week, the Federal Reserve minutes and CPI will be focal points

The US released its non-farm payroll report on Friday, showing 178k new jobs added. Additionally, February data was revised from an initial estimate of a 92k decrease to a 133k decrease. The unemployment rate fell from 4.4% to 4.3%, while the labor force participation rate slightly declined from 62% to 61.9%. Finally, wage pressures eased, with the average hourly earnings year-over-year growth rate dropping from 3.8% in February to 3.5%. The report, amid the backdrop of a reduced probability of rate cuts by 2026, provided short-term support for the dollar.
Before aiming for a stable rebound, gold investors need further clarity on the Middle East conflict. On Monday, the US economic calendar will release the March ISM Services PMI report. Unless this index unexpectedly falls into the contraction zone below 50, it is unlikely to significantly impact gold valuations.
On Wednesday, the Federal Reserve will publish the March monetary policy meeting minutes. The revised Summary of Economic Projections (SEP) after the meeting indicates that policymakers' median forecast points to a 25 basis point rate cut by 2026. If the minutes show that Fed officials are open to tightening policies due to inflation rising from the long-term Middle East conflict, spot gold may face new selling pressure. Conversely, if policy discussions focus more on supporting the labor market, gold prices could rise slightly.
The US Bureau of Labor Statistics (BLS) will release the March Consumer Price Index (CPI) data on Friday, marking the first presentation of inflation dynamics amid rising energy prices. According to CME FedWatch Tool, the market currently estimates about an 83% chance that the Federal Reserve will keep the policy rate unchanged at 3.5%-3.75% through the end of 2026. Strong inflation data could lead market participants to reassess the likelihood of Fed rate hikes. Therefore, if the monthly CPI significantly exceeds expectations, it could boost the dollar and pressure spot gold. (The above content is for reference only and does not constitute any investment advice)
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