Gold Rally Accelerates as Jobs Report Triggers Rate Expectation Reversal

The gold market's recent reaction to Friday's jobs report had far-reaching consequences. The employment numbers caught investors off guard, with nonfarm payrolls contracting by 23,000 jobs, a stark reversal from the expected 80,000 gain.

The impact was felt across the equity complex, with gold miners delivering one of their strongest weekly performances in years. The VanEck Gold Miners ETF (GDX) surged 21.09% over five sessions to $89.73, while junior miners did even better, with the VanEck Junior Gold Miners ETF (GDXJ) advancing 22.42% to $116.78.

The jobs report also triggered a swift repricing of Fed expectations, with futures markets assigning around a 55% probability to a September rate hike before the release, but flipping to pricing an unchanged Fed after the data.

The combination of falling rate expectations and a weakening dollar added further fuel to gold's gains. The metal settled Friday's session at $4,401.40 per ounce, a 2.37% daily gain that extended the weekly advance to 7.39%. This marked a fresh multi-week high and handed gold its most decisive breakout from the sideways trading range that had dominated recent months.