Gold prices climbed 2.5% on Thursday, rebounding from an eight-month low to reach approximately $4,134 an ounce, as weaker-than-expected US jobs data prompted investors to scale back expectations for further Federal Reserve rate hikes. US gold futures also advanced. This surge in gold, which typically benefits from weakening interest rate expectations due to its non-yielding nature, was further supported by a softer dollar, making the metal cheaper for international buyers. Silver also saw a significant rally, jumping about 4.6% to $61.77 per ounce.
The gains followed a Bureau of Labor Statistics report indicating the US economy added just 57,000 jobs in June, well below market expectations of 114,000, and a sharp slowdown from the previous month. Revisions also cut April and May payroll gains by a combined 74,000. While the unemployment rate unexpectedly fell to 4.2% from 4.3% in May, this was partly attributed to a 0.3 percentage point drop in labor force participation to 61.5%. Traders subsequently lowered bets on near-term Fed tightening, with market-implied odds of a September rate hike falling to around 50% from roughly two-thirds before the report.
Additional support for precious metals came from lower oil prices, driven by increased shipments through the Strait of Hormuz and progress in indirect US-Iran talks, which helped ease energy-related inflation concerns. Federal Reserve Chair Kevin Warsh had also stated on Wednesday that inflation expectations had eased, reiterating the central bank's commitment to restoring price stability. Average hourly earnings rose 0.3% month-on-month to $37.64, bringing annual wage growth to 3.5%. Leisure and hospitality employment declined by 61,000 in June, influenced by weaker seasonal hiring despite World Cup tourism expectations.
