Gold jumps 2.8% after soft US job numbers ease Fed rate hike fears

Published Fri, Jul 3, 2026 · 08:50 AM

[LONDON/ BENGALURU] Gold climbed after weak US job numbers eased fears that the Federal Reserve may raise interest rates this year to tackle inflation.

Bullion jumped as much as 2.8 per cent after the report, extending a two-day recovery from the lowest level in almost seven months.

This came as US hiring slowed sharply in June, with nonfarm payroll figures trailing all but one estimate in a Bloomberg survey.

A Labour Department report showed the US economy added 57,000 jobs in June, compared with economists’ estimates for a rise of 110,000. The unemployment rate stood at 4.2 per cent.

David Meger, director of metals trading at High Ridge Futures, said that the “lower-than-expected jobs number portends to less likelihood of potential rate hikes later this year”.

“We saw a significant rally in the gold market on the back of that,” added Meger, who noted that gold tends to perform better in lower interest rate environments.

Higher borrowing costs are a headwind for the non-yielding precious metal.

Traders now see a nearly 51 per cent chance of a rate hike by September, down from 66 per cent before the jobs data, according to the CME FedWatch tool.

Lower rate hike fears

The soft numbers will reduce pressure on Fed chair Kevin Warsh to hike rates at the central bank’s next meeting in July.

On Wednesday, Warsh made remarks seen as less hawkish than feared at a European Central Bank (ECB) forum in Portugal.

“A weaker-than-expected jobs report has put Fed rate cuts back in focus, sending yields and the dollar lower and giving gold another leg higher,” said Ewa Manthey, commodities strategist at ING Bank NV.

“Looking ahead, the metal’s direction will depend on whether incoming economic data continues to support the case for rate cuts.”

While refusing to offer signals on the direction of Fed policy, Warsh’s remarks on Wednesday that “inflation risks have come down” were perceived as less hawkish than his remarks at his first Fed press conference earlier in June.

Then, he emphasised the importance of price stability, a message he also reaffirmed at the ECB’s meeting in Sintra.

Meanwhile, the World Gold Council said that central banks were back in buying mode in May and, based on the latest reported data, official gold reserves increased by a net 41 tons during the month.

US gold futures settled 1.1 per cent higher at US$4,125.7 as of 1.20 pm in New York.

Spot gold was up 2.1 per cent at US$4,113.32 an ounce as of 3.46 pm in New York. Silver rose 2.5 per cent to US$60.63.

Platinum and palladium also advanced. The Bloomberg Dollar Spot Index edged down 0.4 per cent. BLOOMBERG, REUTERS