The unexpected non-farm payroll report reinforced the Fed's expectations of a rate cut, and gold prices hit a record high near $3,600, surging 37% so far this year.
2025-09-06 06:58:28
Gold's strong rally gained momentum on Friday, bringing prices within pennies of $3,600 an ounce, as weak U.S. jobs data further fueled expectations of a Federal Reserve rate cut. Spot gold rose 1.4% to $3,596.55 an ounce, having earlier hit a record high of $3,599.89, marking its strongest weekly gain in nearly four months. U.S. gold futures for December delivery settled up 1.3% at $3,653.30.
Driven by factors such as a weak dollar, central bank buying, softening monetary policy and widening geopolitical and economic uncertainty, gold prices have surged 37% so far this year after rising 27% in 2024.
Data showed that U.S. job growth weakened sharply in August and the unemployment rate rose to 4.3%, confirming that labor market conditions are weakening.
The number of new non-farm payrolls in the United States in June was revised down by 27,000 from 14,000 to -13,000, the first such decline since December 2020. Federal government employment in the United States fell by 15,000 in August, a decrease of 97,000 from the January peak. Employment in the mining, quarrying, and oil and gas extraction industries in the United States fell by 6,000 in August. New York Times analysts said that Trump has made the return of manufacturing to the United States a key part of his economic agenda, but so far, the industry has continued to suffer job losses.
Analyst Matthew Boesler said that in August, employment in the health care and social assistance industry increased by about 47,000 people. This was the smallest monthly increase since January 2022. Given that this industry has contributed more than 40% of new jobs in the past three years, this can be regarded as a major warning signal for the overall labor market.
Traders are currently betting on a 90% chance of a 25 basis point rate cut in September and a 10% chance of a 50 basis point cut.
Independent metals trader Tai Wong said that gold has hit new highs; bulls are watching the trend of significantly weakening employment translate into multiple interest rate cuts, and the outlook for gold is undoubtedly bullish as concerns about the labor market overwhelm inflation in the short term (and possibly medium term).
Analysts also pointed to the Federal Reserve's independence as a key factor influencing gold's performance, an issue that has come into focus after U.S. President Trump attempted to fire Fed Governor Lisa Cook and repeatedly pressured the Fed to lower interest rates.
President Trump said he sees Kevin Hassett, director of the White House National Economic Council, Christopher Waller, a Federal Reserve governor, and Kevin Warsh, a former governor, as his final choices to replace Jerome Powell at the helm of the central bank. "You could say they're the top three," Trump told reporters in the Oval Office. Trump had hinted earlier on Friday that while he had almost decided on his pick, he would still go through the interview process.
US President Trump said on Friday that "substantial" tariffs on semiconductors are coming. Trump made the remarks while answering reporters' questions at a White House dinner with tech leaders. He said he discussed tariffs with some of the tech leaders in attendance. He reiterated that tariffs would be imposed on companies that don't enter the US. Trump said Apple CEO Tim Cook would be fine if the tariffs were implemented.
Non-interest-bearing gold tends to shine when interest rates are low and uncertainty is high, becoming the asset of choice for investors seeking safety.
Physical demand for gold in major gold-consuming countries China and India fell this week as prices hit record highs.
The geopolitical situation may also support gold prices to continue to rise next week. Ukrainian President Zelensky rejected Putin's invitation to meet in Moscow. Zelensky said that Putin "can come to Kiev."
Goldman Sachs Group Inc. said gold prices could rise to nearly $5,000 an ounce if the Federal Reserve's credibility is damaged and investors convert a small portion of U.S. Treasury bonds into gold.
Goldman Sachs analysts, including Samantha Dart, said: "Impaired Fed independence could lead to higher inflation, lower stock and long-term bond prices, and a weakening of the dollar's reserve currency status. In contrast, gold is a store of value that does not rely on the trust of institutions."
The Goldman Sachs report outlined a range of possible outcomes for gold prices, including a base case forecast of $4,000 an ounce by mid-2026; a so-called tail risk scenario of $4,500; and a forecast of nearly $5,000 an ounce if just 1% of privately held U.S. Treasuries were converted into gold.
"We estimate that if 1% of privately held U.S. Treasuries were to shift into gold, assuming all other factors remain unchanged, the price of gold would rise to nearly $5,000 an ounce. Therefore, gold remains our most resolute bullish position in the commodity sector," the analysts said.
Driven by factors such as a weak dollar, central bank buying, softening monetary policy and widening geopolitical and economic uncertainty, gold prices have surged 37% so far this year after rising 27% in 2024.
Data showed that U.S. job growth weakened sharply in August and the unemployment rate rose to 4.3%, confirming that labor market conditions are weakening.
The number of new non-farm payrolls in the United States in June was revised down by 27,000 from 14,000 to -13,000, the first such decline since December 2020. Federal government employment in the United States fell by 15,000 in August, a decrease of 97,000 from the January peak. Employment in the mining, quarrying, and oil and gas extraction industries in the United States fell by 6,000 in August. New York Times analysts said that Trump has made the return of manufacturing to the United States a key part of his economic agenda, but so far, the industry has continued to suffer job losses.
Analyst Matthew Boesler said that in August, employment in the health care and social assistance industry increased by about 47,000 people. This was the smallest monthly increase since January 2022. Given that this industry has contributed more than 40% of new jobs in the past three years, this can be regarded as a major warning signal for the overall labor market.
Traders are currently betting on a 90% chance of a 25 basis point rate cut in September and a 10% chance of a 50 basis point cut.
Independent metals trader Tai Wong said that gold has hit new highs; bulls are watching the trend of significantly weakening employment translate into multiple interest rate cuts, and the outlook for gold is undoubtedly bullish as concerns about the labor market overwhelm inflation in the short term (and possibly medium term).
Analysts also pointed to the Federal Reserve's independence as a key factor influencing gold's performance, an issue that has come into focus after U.S. President Trump attempted to fire Fed Governor Lisa Cook and repeatedly pressured the Fed to lower interest rates.
President Trump said he sees Kevin Hassett, director of the White House National Economic Council, Christopher Waller, a Federal Reserve governor, and Kevin Warsh, a former governor, as his final choices to replace Jerome Powell at the helm of the central bank. "You could say they're the top three," Trump told reporters in the Oval Office. Trump had hinted earlier on Friday that while he had almost decided on his pick, he would still go through the interview process.
US President Trump said on Friday that "substantial" tariffs on semiconductors are coming. Trump made the remarks while answering reporters' questions at a White House dinner with tech leaders. He said he discussed tariffs with some of the tech leaders in attendance. He reiterated that tariffs would be imposed on companies that don't enter the US. Trump said Apple CEO Tim Cook would be fine if the tariffs were implemented.
Non-interest-bearing gold tends to shine when interest rates are low and uncertainty is high, becoming the asset of choice for investors seeking safety.
Physical demand for gold in major gold-consuming countries China and India fell this week as prices hit record highs.
The geopolitical situation may also support gold prices to continue to rise next week. Ukrainian President Zelensky rejected Putin's invitation to meet in Moscow. Zelensky said that Putin "can come to Kiev."
Goldman Sachs Group Inc. said gold prices could rise to nearly $5,000 an ounce if the Federal Reserve's credibility is damaged and investors convert a small portion of U.S. Treasury bonds into gold.
Goldman Sachs analysts, including Samantha Dart, said: "Impaired Fed independence could lead to higher inflation, lower stock and long-term bond prices, and a weakening of the dollar's reserve currency status. In contrast, gold is a store of value that does not rely on the trust of institutions."
The Goldman Sachs report outlined a range of possible outcomes for gold prices, including a base case forecast of $4,000 an ounce by mid-2026; a so-called tail risk scenario of $4,500; and a forecast of nearly $5,000 an ounce if just 1% of privately held U.S. Treasuries were converted into gold.
"We estimate that if 1% of privately held U.S. Treasuries were to shift into gold, assuming all other factors remain unchanged, the price of gold would rise to nearly $5,000 an ounce. Therefore, gold remains our most resolute bullish position in the commodity sector," the analysts said.
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