Gold Gains After U.S. Jobs Data Comes in Well Below Estimates

Gold jumped to a four-week high after a key report showed the U.S. economy added fewer jobs than forecast, diminishing the possibility that the Federal Reserve will taper stimulus soon.

Data on Friday showed the U.S. added 235,000 jobs in August, the smallest amount in seven months and well below economists’ forecasts. The dollar fell after the report, boosting gold, though the metal pared some of its gains as Treasury yields climbed.

Bullion has struggled this year amid a global economic rebound from the pandemic, which has raised the prospect of central banks reining in massive monetary stimulus. Friday’s U.S. jobs print will ease those concerns, and may reflect growing fears about the rapidly spreading delta variant of Covid-19.

The “headline miss, especially given the decline in contribution from leisure and hospitality, fits with disruptions from delta,” said Marcus Garvey, head of metals strategy at Macquarie Group Ltd. “Gold’s initial reaction makes sense, but if yields don’t reverse, it’ll struggle to hold onto the gains.”

Gold gained after the U.S. jobs report came in well short of estimates

The focus will now turn to economic data released ahead of the Fed’s meeting later this month. Any more indications that the U.S. recovery is stuttering may give the central bank cause to delay tapering its asset purchases. Chair Jerome Powell said last week a reduction in monthly bond purchases could begin this year, with the labor market making “clear progress.”

Spot gold rose 0.8% to $1,823.26 an ounce by 1:58 p.m. in London, and is now heading for a weekly gain. Silver and platinum also climbed, while palladium was little changed. The Bloomberg Dollar Spot Index slipped 0.2%.