Gold surged over 2.30% on Friday and climbed more than 7% for the week after disappointing US nonfarm payrolls data significantly weakened expectations for Federal Reserve interest rate hikes. The XAU/USD pair skyrocketed following the mixed employment report, which showed weaker-than-expected job additions while unemployment held steady. The softer labor market data signals potential cooling in the economy, prompting traders to rapidly reprice Fed policy expectations and pile into the precious metal as a safe haven.
The dramatic weekly gain reflects an aggressive shift in market sentiment, with the disappointing NFP print effectively crushing near-term rate hike bets. Traders and brokers should expect continued volatility in gold as markets digest the implications for monetary policy. The dollar weakened sharply against gold as rate expectations collapsed, making the non-yielding asset more attractive in the current environment.
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Traders should monitor upcoming Fed communications closely, as this employment data materially alters the rate trajectory and could fuel further gold momentum if dovish rhetoric follows.
Source: FXStreet