Gold surges to biggest weekly gain since January on weak US jobs data

Gold prices posted their strongest weekly performance since January, driven by weaker-than-expected U.S. employment figures that shifted market expectations toward interest rate cuts.

Spot gold was up 0.4% at $4,254.11 per ounce after hitting a seven-week high in the previous session, with prices up more than 5% for the week. The metal had gained more than 7% the prior week and reached its highest level since June 17.

The rally followed U.S. nonfarm payrolls falling by 23,000 in July, sharply below expectations of an 80,000 gain. The disappointing jobs data prompted futures markets to flip the odds of a rate hike at the September 15-16 Federal Open Market Committee meeting from likelier-than-not to a worse-than-even chance. Lower interest rates typically boost gold, which yields no income and becomes more attractive when borrowing costs decline.

Other precious metals also moved higher. Spot silver rose 0.5% to $63.85 per ounce, while platinum gained 0.2% to $1,748.25. Palladium slipped 0.5% to $1,371.16.

Central bank demand added to the bullish backdrop. China's central bank purchased nearly 20 tonnes of gold in July, marking its largest monthly purchase since October 2023. The purchase extended China's gold-buying streak to 21 consecutive months and lifted its total holdings to a record 2,366 tonnes.

Gold has experienced a dramatic long-term rally. Since 2020, the price has climbed from $1,585 per ounce to more than $4,500 per ounce. Economists at Deutsche Bank have predicted the metal could reach $8,000 per ounce by 2031.

Key U.S. inflation data due this week—including the Consumer Price Index and Producer Price Index—could influence gold's direction ahead of the Federal Reserve's September policy decision.