The Bureau of Labor Services reported Friday that 160,000 jobs were created in April, missing economists' expectations and sending a signal that the American economy is not as strong as has been anticipated.
This, in turn, is reducing expectations about rate hikes from the Fed. For instance, Bank of America Merrill Lynch's economic research team no longer believes the U.S. central bank will raise its rate target in June and again in December; it believes we will only see one hike, in September.
"Following a string of disappointing data, the April jobs report has pushed us to change our Fed call," the BofAML team wrote Friday. "There has been a loss of momentum in the U.S. data."
The perception that the Fed would be reticent to raise rates sent short-term Treasury yields sinking Friday, and helped gold. The yellow metal tends to dislike rate hikes, since higher rates mean that nonyielding gold becomes a less attractive investment as compared to bonds.
"Gold is reacting positively to the jobs number, so with record high open interest for the year in gold," the metal is expected "to finally close over $1,300," RBC Wealth Management precious metals expert George Gero wrote Friday.
Indeed, gold rose as high as $1,297.70 in early afternoon trading, putting it markedly close to the widely watched round number, and close to the highest level in 20 months.
If expectations for rate hikes continue to be pushed into the future, gold could manage to add to its 22 percent rally for 2016. As on Friday, the fed funds futures implied a one-third chance of a September rate hike, according to CME's FedWatch tool.
Based on what the April number indicates about the Fed's policy path, "the next bull market in gold is starting," predicted RJO Futures senior market strategist Phillip Streible.