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Gold rose the most in a month after the latest US jobs report painted a mixed picture of the labor market, further clouding the outlook for Federal Reserve rate hikes.
Spot gold spiked 2.7% to $1673.55 per ounce by noon ET, on pace for its biggest weekly gain since early October. US gold futures were also up by 2.7%, trading at $1,674.60 per ounce in New York.
[Click here for an interactive chart of gold prices]
The latest data showed that US employers hired more workers than expected in October, with nonfarm payrolls increasing by 261,000 for the month, far above the median economist estimate. However, the unemployment rate also rose more than expected to 3.7%, suggesting some loosening in labor market conditions.
The US dollar fell the most since August following the print, boosting gold, which is priced in the currency.
“This will do little to change the Fed’s mind about the labor market and the threat to inflation,” said Nicky Shiels, head of metals strategy at MKS PAMP SA, in a Bloomberg note. “But gold and silver just aren’t responding to the ‘good news is bad news’ hawkish Fed narrative.”
The conflicting report did not provide a clear indication that the labor market is cooling, which would allow the Fed to slow its rate hikes. Gold has slumped about 20% this year due to the central bank’s relentless monetary tightening, which diminishes the appeal of non-yielding assets like gold.
Chair Jerome Powell signaled less aggressive tightening could be appropriate going forward, after hiking rates 75 basis points at this week’s meeting. Still, monetary policy will probably have to be more restrictive than previously anticipated to cool high inflation, he said on Wednesday.
“With support firmly established at $1,615, the first key upside challenge awaits in the $1,675-80 area where we find a recent high, the 50-day moving and trendline from the March high,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.
(With files from Bloomberg)
