Gold Prices Soar as Weak Jobs Data Dims Rate Hike Hopes
Gold prices surged on Friday to their highest in seven weeks, reaching $4,341.69 per ounce after the release of weak U.S. nonfarm payrolls data for July.
The unexpected drop in jobs numbers, which came in at a decrease of 23,000 last month, dashed hopes of a rate hike by the Federal Reserve and set gold on course for its best week in seven months.
As a result, spot gold jumped 2.4% to $4,341.69 per ounce by 10:57 a.m. EDT (1457 GMT), with U.S. gold futures climbing 2.4% to $4,402.20.
Bullion is set to post its largest weekly rise since January 19, with prices gaining over 7% so far this week, according to David Meger, director of metals trading at High Ridge Futures: '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.'
The reduced likelihood of a rate increase portends a weaker dollar and stronger gold prices, as lower interest rates make gold more attractive relative to yield-bearing assets.