Gold jumped more than 1% Friday after a surprisingly weak U.S. jobs report pushed Treasury yields lower and sharply reduced expectations for another Federal Reserve rate hike this month.
Spot gold rose to around $4,223 per ounce, while U.S. gold futures climbed as high as roughly $4,254. The move followed September payroll data showing the U.S. economy added only 29,000 jobs, far below the 90,000 expected.
The unemployment rate also edged up to 4.2%, while July and August payrolls were revised down by a combined 60,000.
October Fed Hike Odds Collapse
The biggest support for gold came from rates.
Markets cut the probability of an October Fed hike to roughly 14%, down from around 70% earlier in the week. At the same time, the 10-year Treasury yield fell toward 5.17%, while the two-year dropped to around 4.72%.
That is almost the reverse of what happened after the strong August jobs report pushed yields higher and gold lower.
Gold Is Reversing This Week’s Rate Shock
The rebound is significant because gold had recently fallen below $4,200 as rising oil prices and Treasury yields revived inflation fears.
That selloff pushed gold to its weakest level since early August, showing how sensitive bullion remains to changes in rate expectations.
Morgan Stanley has also argued that $4,000 could act as an important floor, supported by central-bank demand, physical buying and the possibility of lower long-term yields. That thesis now has fresh support after Friday’s move lower in Treasury rates. Morgan Stanley’s latest gold outlook still sees lower yields as one of the key catalysts for renewed upside.