Gold hits seven-week high as weak US jobs data dents rate hike bets

NEW YORK: Gold surged on Friday, hitting its highest in seven weeks, after an unexpected drop in US nonfarm payrolls for July dashed rate-hike hopes and set bullion on course for its best week in seven months.

Spot gold jumped 2.3percent to USD4,336.02 per ounce by 2:42 p.m. EDT (1842 GMT), having risen more than 3percent to its highest since June 17.

Bullion is set to post its largest weekly rise since January 19, with prices gaining more than 7percent so far this week. US gold futures climbed 2.3percent to settle at USD4,399.70.

Nonfarm payrolls in the United States decreased by 23,000 jobs last month after a downwardly revised 20,000 increase in June, the US labor department’s Bureau of Labour 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,” said David Meger, director of metals trading at High Ridge Futures. Declining energy prices and a potentially reduced likelihood of US interest rate increase portend to a weaker dollar and stronger gold prices, Meger said.

The rate futures market has now priced in a 43.9percent chance of Fed tightening in September, compared with 57percent before the jobs report, according to LSEG data. The probability that the Fed will hold rates next month rose to 56.1percent versus 43.2percent 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 USD5,000 per ounce in the first half of 2027, it said in a note on Friday. On the geopolitical front, US President Donald Trump told reporters that he believed the war with Iran would be over soon.

Among other metals, spot silver gained 3percent to USD63.29 per ounce, platinum firmed 1.1percent to USD1,747.60, and palladium rose 0.8percent to USD1,381.61. All three metals were headed for weekly gains.