Gold Futures Settle Higher As Dollar Slips After Jobs Data

Gold futures settled higher on Friday as the dollar slipped on bets the Federal Reserve will soon end its interest rate hiking cycle after data showed U.S. non-farm payroll employment increased by less than expected in the month of July.

The dollar index dropped to a low of 101.74 around noon, and despite recovering to 101.88, is nearly 0.6% down from the previous close.

Gold futures for December ended higher by $7.30 at $1,976.10 an ounce.

Silver futures for September ended up $0.019 at $23.716 an ounce, while Copper futures for September settled lower by $0.0320 at $3.8675 per pound.

“Gold prices are rallying as the bond market selloff ends following a mixed NFP report that did not derail some expectations that the Fed is still probably done raising rates,” says Edward Moya, Senior Market Analyst at OANDA. “This jobs day still suggests a soft landing is obtainable but if wage growth remains strong over the next couple of months that could create some problems. Higher rates for longer is still an environment that gold can thrive in, especially if Wall Street becomes fixated over the deficit.”

Data from the Labor Department said non-farm payroll employment climbed by 187,000 jobs in July after rising by a downwardly revised by 185,000 jobs in June.

Economists had expected employment to jump by 200,000 jobs compared to the addition of 209,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate edged down to 3.5 percent in July from 3.6 percent in June. Economists had expected the unemployment rate to remain unchanged.

The Labor Department also said average hourly employee earnings increased by $0.14 or 0.4 percent to $33.74 in July.

Annual wage growth came in at 4.4% in July, unchanged from June. Economists had expected the pace of growth to slow to 4.2%.

Following the mixed report, most economists still expect another pause in interest rate hikes by the Federal Reserve next month, although the data has led to some uncertainty about the outlook for rates beyond that.

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