Gold prices jumped 1% on Friday to their highest levels since April 2018 as a sharp slowdown in US jobs growth sent the dollar lower on growing expectations that the Federal Reserve would cut interest rates this year. Gold also has benefited from concerns that US trade wars with Mexico and China will slow the global economy. The precious metal is up 3.1% so far this week, on track for its biggest weekly gain since April 2016.
Spot gold was 0.8% higher to $1,345.71 per ounce at 10:46 am. EDT (1446 GMT) having earlier hit its intra-day high of $1,348.08. US gold futures were up 0.6% at $1,350.40 an ounce. "The US jobs number was weaker than expected and that rallied the gold market. That gives the bulls more technical momentum," said Jim Wyckoff, senior analyst at Kitco.
The US Labor Department reported in the morning that job growth slowed sharply in May and wages rose less than expected. Chances "have significantly increased that the US Federal Reserve is going to lower interest rates sooner rather than later and that is also working in favour of the precious metals bulls," Wyckoff said.
Traders of US short-term interest rate futures added to bets that the Fed will start to cut rates as soon as July and reduce them two more times before the end of the year. On Thursday, New York Fed President John Williams on acknowledged the impact of trade and global growth concerns on business investment.
Lower interest rates boost gold by reducing the opportunity cost of holding the metal and by weakening the dollar, which skidded to its lowest in 2-1/2 months after the US jobs data. However, some investors still believe gold prices could consolidate after the recent sharp rise. "We have had quite a move higher earlier this week but we are moving towards levels where the market will struggle to go much higher," ING analyst Warren Patterson said, adding that overall sentiment is still "fairly supportive for the metal."
Among other metals, silver soared 1.6% to $15.08 per ounce, on track for its biggest weekly increase since late January. Platinum rose 0.7% to $809.26 an ounce. The metal was headed for its first weekly gain in seven. Palladium rose 1.7% to $1,374.30 an ounce.
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