Gold prices declined on Friday after a stronger-than-anticipated U.S. jobs report diminished expectations for a significant interest rate cut by the Federal Reserve in the upcoming policy meeting. The better-than-expected labor market data drove the U.S. dollar higher, making gold less attractive for overseas buyers.
At the trading day’s close, spot gold had slipped 0.2%, trading at $2,649.69 per ounce. This was a decline from last week’s record high of $2,685.42. Similarly, U.S. gold futures settled 0.4% lower at $2,667.80, reflecting the market’s reaction to the robust employment report.
The jobs report revealed that U.S. employment growth had accelerated in September, with the unemployment rate dropping to 4.1%. This labor strength further reduced pressure on the Federal Reserve to implement an aggressive rate cut of 50 basis points (bps) during its policy meeting in November. Market participants had been expecting such a move, but the strong payroll data shifted the outlook, with many now anticipating a more modest 25 bps cut instead.
Following the report, the dollar surged to a seven-week high, bolstered by the unexpected labor market strength. A stronger dollar tends to make gold more expensive for foreign buyers, contributing to the precious metal’s price decline. Traders also adjusted their expectations, with the probability of a 50 bps rate cut in November dropping significantly after the release of the employment data.
Despite this downward pressure, geopolitical tensions in the Middle East supported gold prices. The ongoing conflict between Israel and militant groups in Gaza raised concerns of further escalation over the weekend. Gold, traditionally viewed as a safe-haven asset during times of political instability, continued to benefit from these uncertainties. Any worsening geopolitical tensions could drive gold prices back toward the $2,700 mark and even threaten new record highs in the coming sessions.
Other precious metals experienced mixed movements, with spot silver rising 0.5% to $32.21, marking a weekly gain. In contrast, platinum fell slightly by 0.1%, trading at $989.33, and palladium remained steady at $1,000. These metals, often used in industrial applications, were influenced by broader market conditions but lacked the safe-haven appeal that continued to support gold amid global uncertainties.
While gold’s rally paused due to the strong labor market data, the combination of geopolitical risks and ongoing market speculation about future interest rate cuts suggests that the precious metal could still see upward movement in the near future. Investors will likely continue to watch both economic data and international events closely, as these factors could significantly impact the trajectory of gold prices in the months ahead.
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