Gold hits seven-week high as US payrolls unexpectedly fall
Gold surged 2.3% as a surprise fall in US payrolls reduced expectations of a Federal Reserve rate rise and put bullion on course for a seven-month-best week
Gold prices jumped to a seven-week high on Friday (August 7) after US employment unexpectedly contracted in July, weakening expectations that the Federal Reserve will raise interest rates at its next meeting.
Spot gold rose 2.3% to US$4,336.02 an ounce at 2.42pm US Eastern Time, or 18.42 GMT, after climbing more than 3% during the session to its highest level since June 17.
Bullion has gained more than 7% this week and is on course for its strongest weekly advance since January 19, marking its best weekly performance in about seven months.
US gold futures also rose 2.3%, settling at US$4,399.70 an ounce.
US payrolls unexpectedly decline
The US Bureau of Labor Statistics reported that non-farm payrolls fell by 23,000 jobs in July, confounding economists’ expectations for an increase.
Economists surveyed by Reuters had forecast that employment would rise by 80,000 positions.
The June figure was also revised sharply lower to an increase of just 20,000 jobs, compared with an initially reported gain of 57,000.
The weaker labour-market figures altered expectations for the Federal Reserve’s September meeting.
David Meger, director of metals trading at High Ridge Futures, said the weaker-than-expected employment data made a Fed rate rise at its next meeting less likely.
He added that lower energy prices and a reduced probability of higher US interest rates pointed towards a weaker dollar and stronger gold prices.
Markets cut expectations of September Fed rate rise
Interest-rate futures markets priced in a 43.9% probability that the Fed would tighten monetary policy in September, according to London Stock Exchange Group (LSEG) data.
That was down from 57% before the employment report was released.
The probability that the Fed would leave rates unchanged at its next meeting increased to 56.1%, from 43.2% before the data.
Lower interest rates generally increase the relative appeal of gold because bullion does not pay interest, making it more competitive with interest-bearing assets when borrowing costs fall.
UBS said in a report on Friday that it expected gold prices to reach US$5,000 an ounce during the first half of 2027.
Geopolitical developments also remained in focus. US President Donald Trump told reporters that he believed the war with Iran would end soon.
Silver and platinum also advance
Other precious metals also gained on Friday and were heading for weekly increases.
Spot silver rose 3% to US$63.29 an ounce, while platinum gained 1.1% to US$1,747.60.
Palladium increased 0.8% to US$1,381.61 an ounce.
