Gold bars lie in a safe on a table at the precious metal dealer Pro Aurum.
Sven Hoppe | Picture Alliance | Getty Images
Gold surged on Friday, hitting its highest in seven weeks, after an unexpected drop in U.S. non-farm payrolls in July dashed rate-hike sentiment and set bullion on course for its best week in seven months.
Spot gold jumped 2.3% to $4,336.11 an ounce, having surged more than 3% to its highest since June 17. Bullion is set to post its largest weekly rise since January 19, with prices gaining over 7% so far this week. U.S. gold futures climbed 2.3% to $4,396.9
Nonfarm payrolls fell by 23,000 jobs last month after a downwardly revised 20,000 increase in June, the Labor Department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls rising 80,000 last month.
“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.
Energy prices coming down, and a potentially less likely Fed rate increase, all portend a weaker dollar and stronger gold prices, Meger added.
The rate futures market has now priced in just 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 steady next month rose to 60.4% versus 43.2% just before the data release.
Lower interest rates make gold more attractive relative to yield-bearing assets as bullion does not pay interest.
UBS expects gold prices to climb to $5,000 an ounce in the first half of 2027, it said in a note on Friday.
On the geopolitical front, U.S. President Donald Trump told reporters that he believed the war with Iran would be over soon.
Among other metals, spot silver gained 3% to $63.31 per ounce, platinum firmed 1.2% to $1,749.95, and palladium rose 0.8% to $1,380.53. All three metals were headed for weekly gains.