Investing.com - Gold prices rallied on Friday, as weaker than expected U.S. employment data diminished the likelihood that the Federal Reserve will raise interest rates at its policy meeting later this month.
Gold for December delivery on the Comex division of the New York Mercantile Exchange jumped $9.60, or 0.73%, to settle at $1,326.70 a troy ounce by close of trade. On Thursday, prices sank to $1,305.50, a level not seen since June 24.
For the week, the yellow metal ended with a slight gain of 80 cents, or 0.06%, as markets continued to speculate over the timing of the next Fed rate hike.
The U.S. economy added 151,000 jobs in August, disappointing expectations for an increase of 180,000, the Labor Department said. The number of jobs created increased by 275,000 in July, whose figure was revised from a previously estimated 255,000 gain.
The unemployment rate remained unchanged at 4.9% this month, confounding expectations for a downtick to 4.8%.
The report also showed that average hourly earnings rose 0.1% in August, below expectations for a 0.2% increase.
The disappointing data dampened expectations for a near-term rate hike, as Fed officials recently indicated that the pace of interest rate increases will be data-dependent.
According to Investing.com's Fed Rate Monitor Tool, investors are pricing in a 21% chance of a rate hike at the Fed's September 20-21 meeting, down from 27% ahead of the employment data. December odds were at around 50%.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell to a daily low of 95.18 before reversing losses to end the day at 95.87, up more than 0.2%, as investors still believe the Fed will hike rates before the end of the year, most likely in December.
Gold slumped to a more than two-month low earlier this week after hawkish signals from senior Fed policymakers, including Janet Yellen and Stanley Fischer, revived speculation of a near-term rate hike.
Also on the Comex, silver futures for December delivery spiked 42.3 cents, or 2.23%, on Friday to settle at $19.36 a troy ounce. On the week, silver gained 62.6 cents, or 3.31%, snapping a four-week losing streak.
Elsewhere in metals trading, copper for December delivery eased up 0.2 cents, or 0.12%, on Friday to end at $2.078 a pound. For the week, New York-traded copper prices dipped 1.0 cents, or 0.19%, the second straight weekly loss.
In the week ahead, market players will be focusing on the outcome of Thursday’s European Central Bank meeting to see if policymakers will step up monetary stimulus to boost inflation and prop up the economy.
Elsewhere, in the U.S., a report on service sector growth will be the highlight of the holiday-shortened week. U.S. markets will remain closed on Monday for Labor Day.
Meanwhile, China is to release what will be closely watched trade and inflation data amid ongoing concerns over the health of the world's second biggest economy.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 5
Finance ministers and central bankers from the G20 group are to hold a summit meeting in China.
China is to publish its Caixin services PMI.
The U.K. is to release its services PMI
Financial markets in the U.S. and Canada are to remain closed for the Labor Day holiday.
Tuesday, September 6
The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
In the U.S., the Institute of Supply Management is to release its services PMI.
Wednesday, September 7
Australia is to release data on second quarter economic growth.
The U.K. is to report on manufacturing and industrial production.
The Bank of Canada is to announce its benchmark interest rate and publish its rate statement.
Thursday, September 8
Australia and China are both to report on their respective trade balances.
The European Central Bank is to announce its benchmark interest rate. The policy meeting is to be followed by a press conference with President Mario Draghi.
The U.S. is to release the weekly report on initial jobless claims.
Friday, September 9
China is to release data on consumer and producer prices.
Canada is to wrap up the week with the monthly employment report.