Gold climbed to a seven-week high on Friday after the United States reported an unexpected drop in July payrolls. Spot gold traded above $4,340 an ounce and briefly moved beyond $4,350 during the session.
The move followed a 23,000 decline in nonfarm payrolls, against expectations for an 80,000 increase. Gold also headed for its strongest weekly performance since January, with gains as Treasury yields and the dollar declined.
US Jobs Report Sends Gold Above $4,300
The US economy lost 23,000 jobs in July, according to the latest labor market report. Economists had expected employers to add about 80,000 positions during the month. The Labor Department also cut its May and June payroll estimates by a combined 103,000 jobs. Those revisions showed weaker hiring momentum across the previous two months.
Meanwhile, the unemployment rate slipped to 4.1% from 4.2% in June. However, the labor force participation rate fell to 61.4%, its lowest level in about five and a half years. Around 264,000 people left the labor force during July. Local government education, retail trade, and financial activities recorded some of the largest job losses.
Healthcare added 22,000 jobs during July, although that pace came below its average gain over the previous year. Construction employment changed little during the month, while manufacturing also showed little movement. The report followed June payroll growth of 20,000 after the latest revision, adding another weak reading to the recent employment trend.
Gold futures surged above $4,400 per ounce after the U.S. economy lost 23,000 jobs in July. The move pushed gold to its highest level since June 5, gaining over 10% in the past month.
Gold Futures Chart | Source: X
Fed Rate Hike Bets Fall After Payroll Shock
Gold gained further as traders reduced expectations for another Federal Reserve rate increase in September. Market pricing put the probability of a September hike near 43.9% after the jobs report. Traders had placed the probability closer to 56% before the data arrived. The change supported non-yielding gold as Treasury yields also moved lower.
Additionally, the US dollar weakened after the payroll figures. The dollar index fell toward 99.49, while the dollar dropped against the yen and euro. The two-year Treasury yield fell more than five basis points during the session. The 10-year yield also declined as markets adjusted expectations for the Fed's next policy decision.
Lower Oil Prices Add Support to Gold Rally
Oil prices also moved lower on Friday as markets tracked talks linked to the Strait of Hormuz. Brent crude traded near $81.79 a barrel, while US West Texas Intermediate fell toward $76.76. Both benchmarks were heading for weekly losses of more than 9%. Lower energy prices reduced some near-term inflation pressure in financial markets.
Notably, US President Donald Trump said he believed the conflict with Iran could end soon. Markets also watched negotiations involving Iran and Gulf states over a possible temporary arrangement for Hormuz shipping. Lower oil prices and weaker payroll data both reduced pressure for an immediate Fed rate increase. Gold gained as the dollar and bond yields moved lower.
Gold Price Tests $4,380 Resistance Area
Gold's latest move also changed the short-term technical structure. XAU/USD broke above a downward trendline drawn from the April highs earlier this week. The daily Relative Strength Index stood near 67 before the post-payroll advance. The daily MACD also moved higher as buying momentum strengthened above the $4,300 level.
XAU/USD Chart | Source: TradingView
The next resistance area sits near $4,380, which lines up with highs recorded in mid-June. A move above that zone would bring the area below $4,600 back into focus. Immediate support sits near Thursday's low around $4,223. Further support appears near the broken trendline around $4,050 and the $4,000 area.
