Gold prices head for weekly gain as Fed hike bets ease

Spot gold traded at $4,182.28 an ounce early Friday. By then, bullion was up 2.3 per cent for the week and on course for its first weekly advance in five, after a soft US payrolls report led traders to scale back expectations for another Federal Reserve rate increase.

The labour-market trigger was blunt. US nonfarm payrolls rose by 57,000 in June, against a Dow Jones estimate of 115,000, CNBC reported. For gold, which pays no yield, the miss worked first through rates: softer hiring can pull down Treasury yields, weaken the dollar and make bullion cheaper to hold.

By Friday morning, gold was heading for its first weekly gain in a month, Reuters reported, as traders pared back bets on a September move by the Federal Reserve. The shift cut against much of June’s trade, when firmer US data kept markets alert to the risk that policy could stay tighter for longer.

Bybit chief market analyst Han Tan said the immediate reaction looked justified.

“Gold’s rally was driven by a sharp slowdown in U.S. hiring last month and the immediate price reaction appears warranted for the time being as markets pare bets for a Fed rate hike in September.”
Han Tan, Reuters

CNBC also cited CME FedWatch data showing a 53.5 per cent chance of a September rate increase after the jobs report. That still left September live. It also took some hawkish premium out of gold, where the direction of rate expectations can matter as much as the level.

A separate Reuters report said gold had already jumped more than 2 per cent on Thursday after the payrolls miss, with lower oil prices adding to the move as investors reassessed the near-term policy outlook. Cheaper energy can feed into inflation expectations, giving traders another reason to question whether the Fed needs to lean harder if labour demand is cooling too.

How traders read the move

The useful signal was not only the size of the weekly gain. It was the timing. A first positive week since late May suggested investors were stepping back from the view that every firm US data point would keep tightening risk alive. Reuters and CNBC both framed the rebound as rate repricing, not a simple flight to safety, making gold a cleaner macro signal than a generic defensive trade.

Bullion offered a sharper read than many other asset classes on Friday. Equities still have earnings revisions and sector risks to absorb. Currencies can be pulled around by relative central-bank paths. Gold responds more directly when investors decide real rates may not need to rise as far as feared.

Its rally, even with FedWatch still treating September as a live meeting, showed how quickly the jobs data changed positioning.

Whether the rebound holds depends on the next inflation, wage and Fed signals. If incoming data revive the case for another hike, part of the week’s gain could unwind. For now, gold’s first weekly rise in a month is a straightforward market verdict: softer hiring made the next Fed step look less certain, and bullion moved first.