The US economy added just 57,000 jobs in June, roughly half the 110,000 that economists had penciled in. Gold responded by doing what gold does when the Fed’s hawkish case starts falling apart: it rallied more than 2% and parked itself above $4,100 per ounce.
The miss wasn’t subtle. It was the kind of number that makes rate-hike narratives look like they were written in pencil. And traders moved fast, slashing the probability of a September Fed rate increase from roughly 66-67% down to about 50-51% on the CME FedWatch tool.
The labor market is cooling, and markets are repricing everything
The unemployment rate held at 4.2%, which reinforces the picture of an economy that’s losing momentum rather than gaining it.
David Meger of High Ridge Futures captured the consensus view among commodity analysts. Lower jobs numbers reduce the likelihood of rate hikes, full stop. In a world where the Fed stays on hold, or even starts thinking about cuts, gold’s opportunity cost drops.
