Gold recovers as US jobs data eases Fed rate hike expectations
Gold prices rose slightly after a significant weekly decline, as traders assessed the implications of a slowing US jobs market and rising bond yields on the Federal Reserve's interest rate policies. Bullion was trading near US$4,150 an ounce, following a 3.4% drop the previous week.
The latest US non-farm payrolls data showed an increase of just 29,000 jobs in September, falling short of all economists' estimates. This weaker-than-expected jobs report has reduced pressure on the Fed to raise interest rates aggressively to control inflation. Currently, markets assign only a 20% chance of an October rate hike, down from 70% a week earlier.
Higher interest rates typically make non-yielding assets like gold less attractive. However, inflationary pressures persist, with oil prices rising due to escalating conflicts in the Middle East. US Treasury Secretary Scott Bessent noted that high borrowing costs align with global trends, despite some rates reaching their highest levels in over two decades.
Gold had previously fallen more than 6% in September due to concerns over energy-driven inflation and the prospect of higher US rates. The Fed's September meeting minutes, due mid-week, may provide further insights into future rate adjustments. Meanwhile, spot gold rose 0.3% to US$4,153.66 an ounce, and silver climbed 1.3% to US$61.15 an ounce after a sharp weekly decline.