Gold prices surged to their highest level in seven weeks on Friday, with spot gold jumping 2.3% to $4,336.02 per ounce by 2:42 p.m. EDT, having risen more than 3% to its highest since June 17, as reported by Reuters. Bullion is set to post its largest weekly rise since January 19, with prices gaining more than 7% so far this week, putting gold on track for its best week in seven months. The rally comes after an unexpected drop in US nonfarm payrolls for July, which dashed rate-hike hopes and set bullion on course for its best week in seven months. Nonfarm payrolls in the United States decreased by 23,000 jobs last month after a downwardly revised 20,000 increase in June, the U.S. labor department's Bureau of Labor Statistics said, significantly missing economists' forecasts of an increase of 80,000 jobs. U.S. gold futures climbed 2.3% to settle at $4,399.70, according to Reuters. David Meger, director of metals trading at High Ridge Futures, noted that "The weaker-than-expected jobs data presents a scenario where the Fed is going to be less likely to raise interest rates at its next meeting."
The rate futures market has now priced in just a 43.9% chance of Fed tightening in September, compared with 57% before the jobs report, according to LSEG data, as reported by Reuters. The probability that the Fed will hold rates next month rose to 56.1% versus 43.2% just before the data release. Lower interest rates make gold more attractive relative to yield-bearing assets as bullion does not generate interest. Declining energy prices and a potentially reduced likelihood of U.S. interest rate increase portend to a weaker dollar and stronger gold prices, Meger said. UBS expects gold prices to climb to $5,000 per ounce in the first half of 2027, it said in a note on Friday, according to Reuters. Despite the shift in rate expectations, inflation remains a key risk, suggesting that the outcome of the next US Fed meeting will continue to depend on upcoming inflation and labour-market data, said Ponmudi R, CEO at Enrich Money.
A US official stated on Friday that progress has been made in talks between Iran and Oman, which could lead to the reopening of the strategic Strait of Hormuz and the restoration of oil exports disrupted by the five-month-old conflict, as reported by Reuters. Reuters, citing a US official speaking on the condition of anonymity, noted that Washington expects an agreement between Iran and Oman, the two nations bordering the waterway, to be reached shortly, allowing standard commercial oil shipments to resume. Securing a deal over control of the strategic passage is considered a key stepping stone toward a broader peace agreement. U.S. President Donald Trump told reporters that he believed the war with Iran would be over soon, reiterating his belief that the conflict would conclude soon while pushing back against reports that American munitions stockpiles were running low, as reported by NDTV Profit. Hopes of peace in the Middle East saw inflation expectations drop, allowing gold to surge higher from a multi-week consolidation above $4,000, said Matt Simpson, a senior analyst at StoneX, as reported by The Hindu BusinessLine.
US labour market data released overnight painted a mixed picture, with initial jobless claims rising slightly last week, while layoffs fell to a two-year low in July, indicating the labour market remains broadly resilient, as reported by CNBC TV18. The ADP National Employment Report released on Wednesday showed that US private payrolls increased by only 44,000 jobs in July, well below market expectations and following a downwardly revised increase of 95,000 jobs in June. The weaker labour market data strengthened expectations that the US Federal Reserve could adopt a less hawkish policy stance, supporting gold prices by lowering expectations of higher interest rates. As per Danske Bank, they forecast nonfarm payrolls at +70k, the unemployment rate unchanged at 4.2%, and average hourly earnings at +0.3% m/m s.a. Capital Economics analysts also expect US non-farm payrolls data to come around 90,000 in July, but the risks lie in the unemployment rate ticking back up to 4.3%. The US employment report, along with wage growth and unemployment data, is expected to be the key driver for gold and silver prices in the near term, with stronger-than-expected jobs data potentially reinforcing expectations of higher interest rates.
Gold and silver rates benefited from declining US Treasury yields and a softer US dollar, while crude oil remained volatile amid shifting headlines surrounding a potential agreement to reopen shipping through the Strait of Hormuz, as reported by Mint. The weaker US labour-market data has strengthened the near-term fundamental backdrop for gold and silver, and any further decline in Treasury yields or the dollar could provide additional support for bullion, said Ponmudi R of Enrich Money. MCX Gold October Futures ended this week on a positive note near the ₹1,52,000 level, breaking out above its 20-week EMA and reclaiming key resistance in the process, with the weekly RSI firming to 56.24 and daily RSI surging to 66.86. Immediate resistance is placed at ₹1,52,200–₹1,52,800, followed by the next resistance zone at ₹1,54,100–₹1,54,800; a sustained close above ₹1,54,800 would open the path toward fresh highs, according to Enrich Money. On the downside, immediate support lies at ₹1,50,000–₹1,50,700, with the next support at ₹1,48,000–₹1,48,600; a break below ₹1,48,000 would stall the current breakout.
