Gold prices climbed sharply on Friday, buoyed by a disappointing US jobs report that tempered expectations for additional Federal Reserve tightening. Spot gold rose 1.28% to $4,175.37 per ounce, reaching its highest level since June 23, while US gold futures for August delivery gained 1.49% to $4,187.30. The precious metal is now on track for its first weekly gain in five weeks, advancing more than 2% after four consecutive weekly declines.
Labor Market Weakness Fuels Gold Rally
The catalyst for Friday's move was the June nonfarm payrolls report, which showed the US economy added only 57,000 jobs—well below the 110,000 consensus estimate. The unemployment rate edged lower, but the decline was largely due to a drop in labor force participation to 61.5%, the lowest since March 2021. The data prompted investors to reassess the pace of monetary tightening, with the CME FedWatch Tool now pricing in a 54% probability of a September rate hike, down from 66% before the release.
A softer rate outlook weighed on the US dollar, with the US Dollar Index (DXY) heading for its largest weekly decline since April. A weaker dollar makes gold more affordable for international buyers, while lower interest rates reduce the opportunity cost of holding non-yielding assets like bullion. Federal Reserve Chair Kevin Warsh offered no forward guidance but reiterated the central bank's commitment to controlling inflation.
Central Bank Demand Provides Underpinning
Beyond monetary policy, ongoing central bank purchases continue to support gold prices. The World Gold Council reported that central banks added a net 41 metric tons of gold to official reserves in May, signaling renewed buying after recent fluctuations. Physical demand showed mixed trends: buying interest in India weakened as higher prices discouraged purchases, while demand in China improved modestly during the week.
Investors are now looking ahead to several key US economic releases, including the Federal Open Market Committee meeting minutes, the ISM Services PMI, weekly initial jobless claims, and the July 14 inflation report. These data points could further influence expectations for Fed policy and gold's trajectory.
Technical Outlook: Key Levels in Focus
Despite three consecutive daily gains, gold's broader technical picture remains cautious. Short-term momentum has improved, with the Relative Strength Index signaling strengthening buying interest. The next upside target is the psychological $4,200 level. Above that, resistance is seen around $4,225 to $4,250, followed by $4,300 and the 200-day simple moving average near $4,483.
On the downside, a move below $4,100 could expose support at $4,050 and the key $4,000 level. A break below $4,000 would leave the yearly low of $3,941 as the next major support. Other precious metals also advanced on Friday: spot silver rose 1.9% to $62.19, platinum gained 2.3% to $1,653.30, and palladium added 0.8% to $1,278.36, all on track for weekly gains.
For broader market context, see our coverage of European stocks hitting new highs on rate optimism and WTI crude falling 6% on diplomatic progress.
This article is for informational purposes only and does not constitute financial advice.
