Gold (XAUUSD) surged Thursday after a weak June payrolls report pressured the U.S. dollar and eased concerns that the Federal Reserve may need to keep tightening policy.
The Bureau of Labor Statistics said the U.S. added just 57K non-farm jobs in June, far below expectations for 115K. The softer labor data lifted risk assets and precious metals, sending front-month Comex gold (XAUUSD) for July delivery up 1.1% to $4,112.70/oz, its highest settlement since June 23. Front-month Comex silver (XAGUSD) also climbed 0.9% to $60.643/oz.
High Ridge Futures' David Meger said the jobs miss lowers the likelihood of additional rate hikes this year, an environment that has historically favored gold. CME FedWatch data showed traders now see slightly better than 50% odds of a September rate hike, down from 66% before the payrolls release.
Trade Nation's David Morrison said gold may have found a bottom, arguing markets may have overstated the Fed's hawkish stance. For investors, fading rate-hike expectations could provide renewed support for gold and gold-backed ETFs such as SPDR Gold Shares (GLD). Investors will now watch upcoming inflation data and Fed commentary for clues on the policy path into September.