Gold hits seven-week high as weak US jobs data cools rate hike bets
Gold jumped to a seven-week high after US July payrolls unexpectedly fell, reducing the odds of a September Fed rate hike and boosting bullion's weekly gains.
Gold prices surged to a seven-week high on Friday, extending their weekly rally to over 7%, after a surprise drop in US employment data dampened expectations of an imminent interest rate hike by the Federal Reserve.
Spot gold jumped 2.6% to $4,348.87 per ounce in morning trading, after earlier climbing more than 3% to its highest level since June 17. US gold futures also rose 2.5% to $4,408.00. The metal is on track for its largest weekly gain since January.
The trigger was the Labor Department's report showing nonfarm payrolls fell by 23,000 jobs in July, against economists' forecasts of an 80,000 increase. June's figure was also revised down to a gain of just 20,000.
"The weaker-than-expected jobs data presents a scenario where the Fed is going to be less likely to raise interest rates at its next meeting," said David Meger, director of metals trading at High Ridge Futures. He added that lower energy prices and a reduced likelihood of a Fed hike point to a weaker dollar and stronger gold.
Market expectations shifted sharply after the data. Rate futures now price in only a 43.9% chance of a September rate hike, down from 57% before the report. The probability of the Fed holding rates steady next month rose to 60.4%.
Lower interest rates increase gold's appeal, as the metal pays no interest and becomes more attractive relative to yield-bearing assets. UBS, in a note on Friday, projected gold prices could reach $5,000 per ounce in the first half of 2027.
On the geopolitical front, US President Donald Trump told reporters he believed the war with Iran would end soon.
Other precious metals also gained, with silver climbing 4.5% to $64.26 per ounce, platinum firming 1.4% to $1,753.09, and palladium rising 0.4% to $1,375.75. All three were headed for weekly gains.