Gold prices rose nearly 2% on Friday as an underwhelming US payrolls data boosted expectations of a Federal Reserve rate cut, while fresh tariff announcements spurred safe haven demand.
Spot gold climbed 1.8% to $3,348.31 per ounce as of 11:40 a.m. ET to erase all of this week’s losses. US gold futures gained 1.6%, trading just above the $3,400 level.
Gold prices have recovered back from the earlier-week losses.
Bullion had been trending down this week as the Federal Reserve held interest rates steady and US economic data came in better than expected. Explaining the Fed’s decision, chair Jerome Powell pointed to the risk of further inflation pressure from tariffs, while citing a seemingly healthy US jobs market.
However, a new Labor Department report on Friday dented market optimism, as the July nonfarm payroll figures came in less than forecast, indicating a slowdown in jobs growth.
“Payrolls numbers came in at below expectations, but a little higher than the market was printing. So, this gives a better probability that the Federal Reserve will cut (rates) later in the year,” said Bart Melek, head of commodity strategies at TD Securities.
According to Reuters‘ latest poll, market participants are now anticipating the US central bank to cut rates twice by year-end, beginning in September.
In his press conference Wednesday, Powell said policymakers would ensure that tariffs don’t lead to “serious inflation” and warned that balance cutting rates “too soon” could prevent inflation from reaching the 2% goal.
“We’ve got a situation where we have inflationary pressures continuing from tariffs and wages, yet job numbers are disappointing. So in that situation, if the Fed cuts (rates), that’s going to have material impact on gold in a positive way,” TD’s Melek told Reuters.
So far this year, bullion has surged by about a quarter as uncertainty over US trade policies and the Fed’s rate path, along with geopolitical tensions, sparked demand for havens.
(With files from Reuters)
