Mumbai, July 04 : Gold prices surged on Friday and headed for a weekly gain after four consecutive weeks of losses, as weaker than expected U.S. employment data cooled expectations of an imminent Federal Reserve rate hike and boosted investor demand for the safe haven metal.
Spot gold rose 1.3% to $4,174.21 an ounce by 1241 GMT after touching its highest level since June 23. The precious metal also held above its 21-day moving average, a technical sign that added to bullish sentiment in the market. For the week so far, spot gold has gained more than 2%, putting it on course for its first weekly advance in nearly a month.
U.S. gold futures for August delivery also moved higher, climbing 1.5% to $4,186.80 an ounce as traders reassessed the likely path of U.S. monetary policy in the wake of fresh labour market data.
The rally in bullion followed the release of U.S. nonfarm payroll figures on Thursday, which showed the economy added only 57,000 jobs last month. The reading came in well below the 110,000 increase forecast by economists in a Reuters poll and signalled a notable slowdown in hiring momentum across the world’s largest economy.
The softer payrolls report quickly altered market expectations around the Federal Reserve’s next move on interest rates. Investors who had been pricing in a stronger possibility of another rate increase in the coming months began scaling back those bets after the data pointed to a cooling labour market.
Han Tan, chief market analyst at Bybit, said the latest jump in gold prices was largely driven by the sharp moderation in U.S. hiring and that the immediate market reaction appeared justified as traders reduced expectations of a Fed rate hike in September. According to the CME FedWatch tool, traders now see roughly a 54% chance of a rate increase in September, down from around 66% before the payroll numbers were released.
The shift in expectations proved supportive for gold because lower interest rates, or even the prospect of fewer hikes, reduce the opportunity cost of holding non-yielding assets such as bullion. Unlike bonds or savings instruments, gold does not offer interest, so it tends to perform better when borrowing costs are stable or expected to decline.
Another key factor behind Friday’s rise was the weakening U.S. dollar. The greenback was on track for its biggest weekly drop since April after the disappointing jobs data, making dollar-priced gold cheaper and more attractive for buyers using other currencies. A softer dollar often lifts demand for bullion in global markets and can amplify gains when broader macroeconomic sentiment is already turning in gold’s favour.
Market participants are now watching whether the latest move in gold can extend into next week, particularly if upcoming U.S. economic indicators reinforce the idea that the Federal Reserve may adopt a more cautious stance. Inflation trends, consumer spending data and further labour market readings will remain critical in shaping expectations for the central bank’s policy path.
For now, the weaker payrolls report has given gold bulls a much needed boost after a difficult stretch of declines. With the metal reclaiming important technical levels and sentiment improving on the back of softer rate expectations, bullion appears to have regained some momentum heading into the final trading sessions of the week.