Gold Prices Plummet as Dollar and Yields Overwhelm Weak Jobs Data

Gold prices tumbled for the fifth week in six as the US dollar and Treasury yields continued to rise, overshadowing an unexpectedly weak September employment report.

The Labor Department's data showed a gain of just 29,000 nonfarm payrolls in September, far below the projected 90,000 increase. The unemployment rate ticked up to 4.2% from 4.1%, and payroll figures for July and August were revised down by 60,000.

The disappointing jobs data briefly lifted gold prices as investors speculated that the Federal Reserve might hold off on further interest rate hikes. However, Treasury yields rebounded as investors focused on longer-term inflation concerns, with the 10-year yield reaching a 5.26% high and the 30-year yield hovering around 5.62%. The strong US dollar made dollar-denominated gold more expensive for buyers using other currencies.

According to Han Tan, chief market analyst at Exinity, 'Gold investors may be hesitant to become overly optimistic at this stage, recognizing that the Fed still maintains a hawkish tilt.' Tan noted that the coming months will depend on how willing the Fed is to tolerate potential labor market weakness while keeping its focus firmly on curbing US inflation.