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 2.4% to $4,341.69 per ounce by 10:57 am EDT (14:57 GMT), having surged over 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. US gold futures climbed 2.4% to $4,402.20.
Nonfarm payrolls in the United States decreased by 23,000 jobs last month after a downwardly revised 20,000 increase in June, the US labour 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 portends to 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 next month rose to 56.1% versus 43.2% just before the data release.
