Gold surged on Friday, hitting its highest in seven weeks, after an unexpected drop in U.S. nonfarm payrolls for July dashed rate-hike hopes and set bullion on course for its best week in seven months.
Spot gold jumped 2.3% to $4,336.02 per ounce by 2:42 p.m. EDT, having risen more than 3% to its highest since June 17. Bullion is set to post its largest weekly rise since January 19, with prices gaining more than 7% so far this week. U.S. gold futures climbed 2.3% to settle at $4,399.70.
Nonfarm payrolls in the United States decreased by 23,000 jobs last month after a downwardly revised 20,000 increase in June, the U.S. labor department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast an increase of 80,000 jobs.
“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.”
David Meger, director of metals trading at High Ridge Futures
The rate futures market has now priced in a 43.9% chance of Fed tightening in September, compared with 57% before the jobs report, according to LSEG data. The probability that the Fed will hold rates next month rose to 56.1% versus 43.2% just before the data release.
Lower interest rates make gold more attractive relative to yield-bearing assets as bullion does not generate interest. UBS expects gold prices to climb to $5,000 per ounce in the first half of 2027, it said in a note on Friday.
Among other metals, spot silver gained 3% to $63.29 per ounce, platinum firmed 1.1% to $1,747.60, and palladium rose 0.8% to $1,381.61. All three metals were headed for weekly gains.
Background
The unexpected drop in U.S. nonfarm payrolls has significant implications for the Federal Reserve's monetary policy, as it may delay the anticipated rate hikes, thereby impacting the dollar's strength and commodity prices.
Investors should monitor upcoming economic data and Federal Reserve announcements closely, as these will provide further insights into the future direction of interest rates and their impact on gold and other commodities.
