Gold surges past $4,150 on weaker jobs data and Fed rate uncertainty
Gold prices climbed above $4,150 an ounce on Monday as investors reacted to a weaker-than-expected US jobs report. The Bureau of Labor Statistics reported that September payrolls increased by just 29,000, while unemployment rose to 4.2%. This data caused traders to sharply reduce the likelihood of a Federal Reserve rate hike in October, dropping it from 64% to 22% in a week. Despite this, the probability of a December hike remained high at 87%, reflecting a shift in timing rather than a change in the overall tightening narrative.
The surge in gold prices came even as the 10-year Treasury yield stayed around 5.26% and the dollar remained strong. Société Générale strategists noted that gold is caught between strong demand from central banks and ETFs, and macroeconomic challenges like a firm dollar and elevated rates. Spot gold gained 0.4% to $4,158.17 an ounce, while US December futures rose 0.6% to $4,186.40.
Demand for gold has remained robust, with US-listed gold ETFs attracting $3.8 billion in September and $7.9 billion in August. Globally, physically backed gold ETFs saw $18 billion in inflows in August, the second-largest monthly inflow on record. China’s central bank also added about 20 tonnes in August, its largest monthly purchase since October 2023. Goldman Sachs analysts highlighted strong sovereign demand as a key factor in their $4,900 year-end forecast but cautioned that a sharp rise in Fed hike expectations could trigger a correction.
The next major test for gold will be the September CPI report on October 14. A softer inflation reading could strengthen the case for a Fed pause and push Treasury yields lower, while a renewed inflation surprise would have the opposite effect. Geopolitical tensions, including fighting in Yemen and unresolved Middle East issues, continue to support safe-haven demand for gold.