Metals

Gold rises after US jobs data

Several gold bars being held.
Akos Stiller | Bloomberg | Getty Images

Gold rose on Friday after U.S. jobs growth came in below expectations, dampening the likelihood of an interest rate hike from the Federal Reserve this month.

U.S. nonfarm payrolls increased by a slower-than-expected 151,000 in August, against expectations for a rise of 180,000.

Spot gold jumped to a session high of $1,328.73 after the non-farm payrolls data, and was last up 0.87 percent at $1,324.94 an ounce. U.S. gold settled up $9.60 at $1,326.70 and was last up 0.87 percent at $1,328.50.

August nonfarm payrolls up 151,000
VIDEO1:2401:24
August nonfarm payrolls up 151,000

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar in which it is priced. U.S. gold futures added 0.7 percent to $1,326.80 an ounce.

"The market was not expecting such a glum number from the U.S. ... it's evidence that the U.S. economy is still not strong enough to sustain another rate hike and that's positive for gold," said Jonathan Butler, commodities analyst at Mitsubishi.

"This number means rake hikes could get pushed further into the future and gold will benefit from safe-haven buying and expectations that the macro environment will continue to be favourable for even longer."

The dollar rose 0.22 percent to 95.86 against a basket of currencies.

"A slightly higher number would have almost guaranteed a rate hike later this month but now the guessing game will continue," Ole Hansen, Saxo Bank analyst, told the Reuters Global Gold Forum on Friday.

Where are gold prices headed?
VIDEO1:2201:22
Where are gold prices headed?

"We do still believe that the FOMC remains in rate hike mode but from a 50/50 chance of a September (increase), they may now opt to indicate a rate hike in December instead."

Silver was up 2.92 percent after the jobs data at $19.39. Platinum rose 1.66 percent to $1,060.30 an ounce while palladium gained 1.54 percent to $673.75 an ounce.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell for a third straight session on Thursday, by 0.57 percent to 937.89 tonnes.

Asian physical gold demand improved slightly this week as a correction in prices prompted consumers to buy for the upcoming festival and wedding season, with discounts in India narrowing to their smallest in three months.

— CNBC's Jeff Cox and Gina Francolla contribute to this report.