Gold Extends Rally as Weak US Jobs Data Temper Rate-Hike Fears

Gold extended its gains as signs of a cooling US labor market eased concern over further interest-rate increases and weakened the dollar.

Spot gold traded near $4,345 an ounce on August 9, Bloomberg reported. Bullion surged more than 7% last week, its biggest weekly gain since January.

The US employment report released on August 8 showed nonfarm payrolls fell in July, while job gains for the previous two months were revised lower. The data fueled views that the labor market is slowing faster than expected, reducing the likelihood of additional rate hikes by the Federal Reserve.

The Bloomberg Dollar Spot Index fell 0.4% after the jobs report. Gold, which does not pay interest, tends to become more attractive when expectations for higher rates recede.

Traders also pointed to bargain buying after gold held the $4,000-an-ounce support level. Data from the US Commodity Futures Trading Commission showed net long gold positions held by hedge funds and asset managers climbed to the highest level in about six months as of August 4.

Investment demand for gold also stayed firm in China. Chinese spot gold exchange-traded funds recorded continued net inflows last week, while the People's Bank of China increased its gold holdings by 640,000 ounces in July, extending its buying streak to 21 consecutive months.

Still, gold remains about 20% below levels seen before the outbreak of the Iran war in February. Talks over reopening the Strait of Hormuz failed to reach a final agreement over the weekend, and Yemen's Houthi rebels claimed they attacked Saudi oil facilities near the Red Sea, keeping geopolitical tensions elevated.