Gold Price Plunges on Surprise Jobs Report, Fed Rate Hike Odds Rise

The price of gold sank by $90 per ounce on Friday, only to rebound above $4400 after a surprise US jobs report revealed stronger-than-expected economic growth in August.

Non-farm payrolls increased by 162,000 last month, significantly exceeding Wall Street's consensus prediction. As a result, traders now place a 3-in-5 chance of a September rate hike from the Federal Reserve, up from 50-50 yesterday.

The FedWatch tool on the CME derivatives exchange shows that investors are increasingly expecting higher interest rates by end-2026, with their consensus now near 4.00% versus the current effective Fed Funds level of 3.63%.

Despite gold's volatility, prices still remain at all-time highs, having reached fresh levels in January this year.