Gold Price Jumps 8% as Fed Hike Bets Fade

Core News & Key Facts

Gold prices ended the week sharply higher, recording a gain of more than 8% as investors reassessed expectations for US monetary policy following weaker-than-expected employment data. The precious metal reached a seven-week high as falling US Treasury yields and a softer US dollar increased the appeal of gold, while developments surrounding the possible reopening of the Strait of Hormuz added another layer to the market outlook.

In India, 24K gold was quoted at ₹1,51,885 per 10 grams, while silver stood at ₹2,31,340 per kilogram. The weekly rally came after gold initially faced pressure as geopolitical risk premiums eased following the postponement of a planned US strike on Iran. The metal subsequently reversed course following the US employment report and emerged as one of the strongest-performing commodities of the week.

The report showed that the US economy unexpectedly lost 23,000 jobs in July, against market expectations for an increase of around 80,000. It was the first monthly payroll decline in five months. Earlier employment figures were also revised lower, with revisions to the previous two months removing approximately 103,000 jobs from the earlier estimates.

Context & Statements

Additional US economic indicators had already pointed towards a cooling labour market. Private payroll growth was weaker than expected, while the ISM Services Employment Index contracted during the week. Although the US unemployment rate edged down to 4.1%, lower labour-force participation contributed to the decline.

The employment data prompted markets to reduce expectations of another Federal Reserve rate increase. The probability of a September rate hike fell to around 44%, compared with approximately 58% before the jobs report. The benchmark US 10-year Treasury yield also declined to about 4.60% after reaching an intraday high of 4.68%, while the dollar weakened.

According to Ponmudi R, CEO at Enrich Money, gold and silver benefited from the combination of lower yields and a weaker dollar. He cautioned that inflation remains an important risk and that upcoming US inflation and labour-market data could continue to determine the Federal Reserve's policy direction.

Market expert Anuj Gupta said cooling crude oil prices could put pressure on Treasury yields and the dollar if smoother oil supplies help contain inflation. He said the broader outlook for gold remains positive, while noting that investors should monitor key technical levels.

Impact & What's Next

The Strait of Hormuz remains an important factor for both energy markets and precious metals. A US official indicated that progress had been made in talks involving Iran and Oman, potentially paving the way for the reopening of the strategic waterway and the restoration of disrupted commercial oil shipments.

For gold investors, analysts are advising caution rather than assuming that the recent rally will continue without interruption. Gupta identified ₹1,52,000 as an important hurdle for domestic gold, with immediate supports at ₹1,49,400 and ₹1,47,000. For international COMEX gold, he placed support around $4,350 and resistance near $4,450 per ounce.

Ponmudi said MCX Gold October Futures had moved near ₹1,52,000 and reclaimed important technical levels. He identified immediate resistance around ₹1,52,200–₹1,52,800, followed by ₹1,54,100–₹1,54,800. On the downside, support is seen around ₹1,50,000–₹1,50,700 and then ₹1,48,000–₹1,48,600. Investors will likely watch US inflation figures, Federal Reserve communication, Treasury yields, currency movements and developments around the Strait of Hormuz before making fresh decisions.