Gold jumped more than 3% after an unexpected contraction in the US jobs market, extending a rebound from its slump below $4,000 an ounce.
Prices rose as much as 3.1% to $4,371.93 an ounce, hitting the highest since mid-June. Data showed US employers cut jobs in July and hiring in the prior two months was revised lower, suggesting the labor market is weaker than previously thought.
The soft jobs data is likely to partially allay worries that the Federal Reserve will soon move to raise interest rates, which would be a headwind for gold as an asset that bears no interest. A Bloomberg gauge of the dollar slumped as much as 0.5% after the data, giving a boost to commodities like gold that are priced in the currency.
The jobs report helped extend bullion’s weekly gain to more than 7%, the most in more than six months, with dip-buyers emerging in growing force since a slump that took gold into a bear market in June.
Friday’s advance also signals that gold buyers were little moved by the ratcheting tensions in the Middle East. Local media reported that Iran struck “hostile targets” in Hormuz and would seek to bar US and Israeli vessels from passing through. Separately, Houthi militants said they conducted a “large-scale” attack against forces from Yemen’s Saudi-backed government.
Gold has fallen by nearly a fifth since the US-Iran war began in late February. The conflict sent energy prices soaring, stoking inflationary pressures and raising the likelihood that rates will stay higher for longer.
Gold isn’t reacting strongly to the flare-ups because its early-week rally wasn’t entirely driven by deescalation, said Justin Lin, an analyst at Global X ETFs. “The original move looked like a technical breakout with some borrowed momentum from the Iran negotiation and doubts around Fed hawkishness,” he said. Currently, it is “more about buyers taking back control rather than a strict reaction to the Middle East talks,” he added.
On another front, gold-backed exchange-traded funds in China racked in more inflows this week, extending the longest such streak since March. Institutional investors see current prices as an attractive entry point, and confidence was also boosted by the metal’s ability to hold above the key $4,000-an-ounce level.
Spot gold was 2.8% higher at $4,357.00 an ounce at 2:37 p.m. in London. Silver was up 4.2% at $64.15 an ounce. Platinum and palladium also advanced.
