Gold Rebounds to $4,150 an Ounce as US Hiring Slowdown Cuts Fed Rate-Hike Bets

Gold prices edged higher after last week’s sharp decline as signs of a slowdown in the US labor market reduced the likelihood of further interest-rate increases by the Federal Reserve.

According to Bloomberg on Oct. 4, spot gold traded at $4,153.66 an ounce as of 8:40 a.m. in Singapore, up 0.3% from the previous session. Bullion dropped 3.4% last week, its biggest weekly decline since June.

US nonfarm payrolls rose by just 29,000 in September, falling short of all estimates in a Bloomberg survey. The weaker employment data eased pressure on the Fed to move quickly with additional rate hikes to contain sticky inflation.

The fed funds futures market now shows about a 20% chance of an October rate increase, down sharply from 70% a week earlier. Because gold does not pay interest, higher rates typically make the metal less attractive to investors.

Inflation pressures, however, remain a headwind for gold. International oil prices have climbed as tensions in the Middle East escalated, while US Treasury yields have held at elevated levels. Gold fell more than 6% last month as concerns over energy-driven inflation combined with worries about further US rate increases.

Markets are now watching for the release of minutes from the Fed’s September Federal Open Market Committee meeting later this week. The Fed raised rates last month for the first time in three years, and the minutes may offer additional clues on the future path of monetary policy.

Silver also rose after tumbling more than 6% last week, gaining 1.3% to $61.15 an ounce. Platinum and palladium advanced as well, while the Bloomberg Dollar Spot Index was little changed after posting gains for the past three weeks.