Gold prices surged above $4,100 per ounce on Thursday, rebounding from an eight-month low, after weaker-than-expected US employment data prompted markets to scale back expectations for further Federal Reserve rate hikes. The US economy added just 57,000 jobs in June, the smallest monthly gain in four months and barely half the consensus forecast of 110,000. Notably, the leisure and hospitality sector lost 61,000 jobs despite the boost from World Cup–related tourism.
The unemployment rate unexpectedly declined to 4.2%, but the drop was driven in part by workers exiting the labor force. Meanwhile, annual wage growth ticked up to 3.5% year-over-year. In the wake of the report, Fed funds futures shifted to imply less than a 50% probability of a rate hike in September, down from about 67% beforehand.
On Wednesday, Federal Reserve Chair Kevin Warsh acknowledged signs of easing inflation expectations while reiterating the central bank’s firm commitment to price stability. Gold prices also drew support from a decline in oil prices, as increased crude shipments through the Strait of Hormuz and progress in indirect US–Iran talks helped alleviate concerns about supply disruptions and inflationary pressures.
