Precious metals in the London spot market trended higher overnight, driven by a significant weakening in U.S. ADP employment figures. With market attention now fixed on Friday's non-farm payroll report, both U.S. Treasury yields and the dollar index retreated from recent highs. This, combined with a technical rebound following gold's earlier oversold conditions, has lifted prices, though volatility remains elevated as geopolitical risks and central bank buying continue to provide underlying support.

On the macro front, U.S. ADP private payrolls rose by just 37,000 in August, a sharp drop from the previous month's 46,000 gain and the smallest monthly increase since January. The Federal Reserve's latest Beige Book indicated that economic activity expanded at a modest pace recently, with slight employment growth and moderate price increases, noting that data center demand has emerged as a primary growth driver. Meanwhile, New York Fed President remained cautious, offering no clear signal on rate policy and stating that officials simply need to "keep monitoring" the incoming data.

In geopolitics, the Middle East conflict escalated sharply, with both sides announcing military strikes on the same day. The softening U.S. jobs data has reignited speculation about whether the Fed will cut rates in September, helping gold halt its decline and push higher. However, escalating U.S.-Iran tensions have driven oil prices back up, and with Fed Chair Warsh's previously hawkish remarks, the possibility of a rate hike has become a topic that cannot be ignored for September. As such, gold warrants a cautious approach. All eyes will be on Friday's non-farm payroll data for clearer direction.

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