Weaker Labor Market Fuels Gold Rally Amid Reduced Rate-Hike Expectations

Gold prices continued their upward trend on August 9, reaching near $4,345 an ounce, according to Bloomberg. The metal surged over 7% last week, its largest weekly gain since January, as a weaker US labor market and reduced rate-hike expectations fueled demand.

The US employment report released on August 8 showed nonfarm payrolls fell in July, while job gains for the previous two months were revised lower. This data tempered concerns over further interest-rate increases by the Federal Reserve, causing the Bloomberg Dollar Spot Index to fall 0.4%.

Traders pointed to bargain buying after gold held the $4,000-an-ounce support level. Investment demand remained firm in China, with Chinese spot gold exchange-traded funds recording continued net inflows last week and the People's Bank of China increasing its gold holdings by 640,000 ounces in July.