Gold Rebounds as Soft U.S. Jobs Data Eases Rate Hike Bets

Key Moments

Gold Stabilizes After Sharp Bounce

Gold prices held steady on Friday, consolidating a strong rebound triggered by softer U.S. employment data that eased worries about rising interest rates.

The move put bullion on track for its first weekly advance in five weeks, following a slide to eight-month lows earlier in the week.

By 09:06 ET (13:06 GMT), spot gold was up 1.1% at $4,170.99 an ounce, while gold futures advanced 1.4% to $4,182.36 an ounce. Over the latest one-week period, spot prices were about 2% higher.

Activity was subdued as market participants scaled back trading ahead of a U.S. market holiday on Friday.

Payrolls Data Weakens Dollar and Lifts Metals

Gold’s advance accelerated on Thursday after the latest U.S. nonfarm payrolls figures for June came in below expectations.

The weaker print reduced market confidence that the Federal Reserve will move to raise interest rates this year, as a solid labor market is one of the key criteria the central bank has highlighted for tightening policy.

The softer jobs data offered some respite to gold, which had been pressured heavily through the second quarter by persistent concerns over higher rates. During the June quarter, bullion shed about 13%, erasing all of its gains for the year.

The US Dollar Index retreated from levels near 13-month highs following the data release, helping fuel a broader recovery across precious metals. Spot silver jumped 2.4% to $62.4075 an ounce, and spot platinum gained 1.9% to $1,656.84 an ounce.

Fed Rhetoric and Outlook for Precious Metals

Despite the latest bounce, gold and the broader precious metals complex remained under pressure from steep losses in the second quarter, driven by growing expectations that the Fed could still lift rates this year.

Policymakers adopted a hawkish tone at their June meeting, and Fed Chair Kevin Warsh reaffirmed this week that the central bank would stick with its 2% annual inflation objective.

Analysts at OCBC struck a cautiously optimistic tone on gold’s prospects in a recent note, stating: “Near term, we would shift the tone from cautious to cautiously constructive. Gold can extend the recovery if incoming US data continue to cap real yields and the USD.”

They also warned that risks remain elevated, adding: “But with unemployment still steady, Fed rhetoric still hawkish and inflation risks still on the Fed’s radar, some tactical caution is warranted.”

Revised Price Forecasts from OCBC

OCBC, a Singapore-based bank, reduced its full-year gold price forecast earlier this week, pointing to lingering short-term challenges posed by U.S. rate expectations and elevated yields. The bank also cut its silver price outlook.