Gold Soars to One-Month High as Weak Jobs Data Fuels Fed Rate Cut Speculation

After vital U.S. jobs data showed that the labor market was deteriorating, gold prices extended their gains on Friday to their best level in over a month. This lifted expectations for a reduction in interest rates by the Federal Reserve in September.

At 2:10 p.m. (1810 GMT), the spot price of gold was $2,385.63 per ounce, representing a 1.3% increase. Since the beginning of the week, the bullion price has increased by more than two percent, Reuters reported.

Silver futures in the United States finished 1.2% higher at $2,397.7.

"Gold is trading at one-month highs as lower payroll revisions and yet another uptick in the unemployment rate help 'cement' a September rate cut," said Tai Wong, an independent commodities trader based in New York. "September rate cuts are expected to be implemented in September."

"Bulls are eyeing a return to $2,450 all-time highs if the Fed starts openly hinting at September," according to the economist.

It was reported that non-farm payrolls in the United States increased by 206,000 jobs in June, somewhat higher than the 190,000 new jobs that analysts polled by Reuters expected would be created.

While this was going on, the expected job growth for May was reduced to 218,000 new jobs from 272,000 new jobs, and the job growth for April was revised to 108,000 new jobs from 165,000 new jobs. However, the actual unemployment rate was 4.1%, somewhat higher than the predicted rate of 4.0%.

After the data was released, the pricing of U.S. interest-rate futures indicated the market's ongoing confidence in a September rate reduction, with the implied chance staying at approximately 72%.

Additionally, traders are factoring in an increasing likelihood of a second rate drop occurring in December. When interest rates are lower, the opportunity cost of storing gold that does not yield is reduced.

Following the release of the jobs statistics, the dollar fell to a three-week low compared to its competitors, making gold more affordable for holders of other currencies. Additionally, the yield on the benchmark 10-year Treasury note in the United States decreased.

In other news, spot silver prices increased by 2.7% to $31.25 per ounce, putting them on course for their best week since May 17th. Palladium climbed 0.2% to reach $1,019.75 per ounce, while platinum increased by 2.6% to reach $1,028.62 per ounce.

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