Gold Surges on Cooling U.S. Jobs Data, Signaling Lower Fed Rate Hike Bets

Gold Surges on Cooling U.S. Jobs Data, Signaling Lower Fed Rate Hike Bets​

Spot gold prices held near a two-week high this Monday following data indicating a cooling U.S. labor market. This development has slightly tempered expectations regarding an immediate interest rate hike by the Federal Reserve (Fed). The reaction underscores the fundamental relationship between precious metals and monetary policy.

Global Gold Prices Rally on Fed Watch Cooling​

Spot gold was steady at $4,175.02 per ounce by 0028 GMT, marking a weekly gain of more than 2%. U.S. gold futures for August delivery climbed 1.5% to reach $4,186.80 per ounce. The move follows four consecutive weeks of declines in the commodity.

The shift is driven by new labor market data released on Thursday. This information showed that U.S. job growth slowed sharply in June. Additionally, payroll gains for the prior two months were revised lower, pointing clearly to a cooling employment environment.

Market Implications of Labor Data and Rate Hike Probability​

Financial markets have reacted swiftly to this softened labor outlook. The CME FedWatch tool now shows approximately a 55% probability of a rate increase in September. This figure is a decrease from the prior expectation, which was above 60%.

As gold is a non-yielding asset, lower interest rate expectations are generally considered favorable for its valuation. Investors remain focused on the upcoming release of minutes from the Fed’s June 16–17 meeting, featuring Kevin Warsh, who is the first in this capacity as Fed chair.

Industrial Metals and Gold Demand Trends​

While gold prices enjoyed a bounce, demand trends presented mixed signals across key markets. JPMorgan analysts noted that expected demand for gold from various sectors may not be as robust as initially anticipated. This view limits the potential rise in gold prices, projecting a maximum of $4,300/oz in the third quarter and $4,500/oz in the fourth quarter.

In regional markets, physical gold demand in India eased on Friday after already rebounding from a three-month low. Conversely, buying interest in China showed a slight improvement in this sector.

Silver, Platinum, and Palladium Extend Gains​

Other precious metals also saw upward movement. Spot silver extended gains to its fifth session, trading at $62.4773 per ounce with an increase of 0.1%. The metal had previously reached its highest level since June 23.

Spot platinum added 0.4%, reaching $1,645.05 per ounce. Palladium also saw gains, rising by 0.1% to $1,275.18 per ounce. Both these metals were positioned for their fourth straight daily rise.