Gold Soars on Weakening Labor Market and Falling Real Yields

Spot gold rallied 2.53% to $4,347.09 per troy ounce on Friday, hitting a fresh seven-week high as investors reassessed their expectations of Federal Reserve interest rate hikes.

The trigger for the rally was the July payrolls report, which showed a decline in jobs and a tick down in unemployment rates. This led to Treasury yields dropping and the dollar selling off, making gold more attractive by comparison.

Gold had already broken above its $4,000-$4,200 range on Wednesday and Thursday before the payrolls number was released, clearing key resistance levels along the way. The rally was further fueled by a decline in real yields, which fell to 4.63% as investors priced out a potential September rate hike.

The market is now positioning for a weak dollar, with the greenback sitting near 99.95 on Friday's close. A weaker dollar makes gold cheaper for non-US buyers, who account for a significant portion of global demand.