Gold Prices Soar on Weaker US Jobs Data and Reduced Rate Hike Odds
The US labor market's surprise contraction in July has sparked a gold price surge to its highest level in seven weeks. Spot gold prices jumped above $4360 per ounce, marking a 3% gain on the day and its best weekly performance since January.
The downward revision of nonfarm payrolls from a forecasted increase of 80,000 to a decline of 23,000 has led rate futures to price in only a 45% chance of a September Fed hike, down from 57% prior to the report. This reduced likelihood of near-term rate increases is supporting gold prices as investors seek lower-risk assets.
Bullion's advance last week, which saw it gain over 7%, was its largest weekly rise since January 19. One major global bank has even predicted that gold prices could reach $5000 per ounce in the first half of 2027 due to a softer dollar and lower real yields.
The September Fed decision is now firmly in focus, with upcoming inflation and employment releases set to be the next major test of whether this rally has further room to run. However, there remains a risk that a hawkish reassertion from the Fed could temper the dollar weakness that is currently driving gold's price increase.