Gold Records Gains Due to Weak U.S. Jobs Data and Rising Trade Tensions

Gold markets saw a significant rise on the evening of Friday, August 1, supported by weaker-than-expected U.S. jobs data, which bolstered expectations for interest rate cuts by the Federal Reserve, alongside rising demand for the yellow metal as a safe haven amid new announcements regarding tariffs.

The spot gold price reached its highest level since July 25, recording a rise of 2.1% to reach $3,359.77 per ounce, while U.S. gold futures settled up 1.9% at $3,413.40. Despite this rise, the weekly gains for the precious metal were limited to just 0.36%, adding $12.10 compared to last week's close.

This performance came after the U.S. jobs report for July showed a growth in non-farm jobs of 73,000, a number significantly lower than analysts' expectations of 100,000 jobs. Additionally, previous months' data showed significant downward revisions, with job growth in June dropping to just 14,000 from 147,000, while the number in May fell to 19,000 from 125,000, reflecting weakness in the labor market.

In this regard, Bart Melek, head of commodity strategies at TD Securities, stated, "The job numbers came in below expectations, but they are slightly higher than the market reading, which enhances the likelihood of an interest rate cut later this year." He added that "an interest rate cut would have a tangible positive impact on gold," especially amid inflationary pressures resulting from tariffs and wages.

For his part, Peter Grant, vice president and senior metals strategist at Zaner Metals, commented on the situation saying, "We have seen an increase in trade uncertainty as the deadline for tariffs approaches, which has boosted demand for safe havens."

In related news, the White House announced a 90-day extension of the trade agreement with Mexico, while imposing new tariffs on imports from Brazil and South Korea. The Federal Reserve also kept interest rates unchanged, but comments from its chairman Jerome Powell lowered expectations for a rate cut in September, although the market now anticipates two cuts before the end of the year.

In other metal markets, silver rose by 0.7% to $36.98 per ounce, platinum increased by 1.6% to $1,309.27, while palladium gained 1% to $1,203.52, despite these metals recording weekly losses.

It is worth noting that U.S. inflation saw an increase in June due to the impact of tariffs, as the personal consumption expenditures index rose by 0.3% month-on-month.