US Labor Market Cools as Fed Rate Hike Expectations Plummet

The US labor market cooled in September, as employers added far fewer jobs than expected, and the unemployment rate rose to 4.2%. The Federal Reserve may leave interest rates unchanged at its October meeting.

The economy created only 29,000 jobs last month, falling short of the 84,000 increase forecast by economists. This marks a slowdown from August's 162,000 new jobs and July's 21,000. The unemployment rate increased from 4.1% to 4.2%, while the labor force participation rate ticked up to 61.8%.

The weak employment report had initially supported gold prices, but a stronger dollar and higher Treasury yields soon outweighed this effect. Spot gold fell 0.75% to $4,146.54 an ounce, and was down about 3.19% for the week. US gold futures settled 0.59% lower at $4,177.50.

The oil market reacted differently to the jobs report, with Brent crude reversing its initial loss of 1.76% and trading 0.24% higher at $102.56. This followed European countries' agreement to release additional diesel stockpiles, easing concerns over fuel supplies.