Onome Amuge
Gold prices rallied sharply on Friday, gaining more than 1.50 per cent, as a dismal US Nonfarm Payrolls (NFP) report signalled a faster-than-expected cooling in the American labour market. This domestic economic weakness, combined with a notable escalation of geopolitical risks between Russia and the United States, propelled the safe-haven metal to trade near the $3,350 mark.
The catalyst for gold’s upward move was the July jobs data, which prompted market participants to increase their bets on an interest rate cut by the Federal Reserve. Although the Unemployment Rate remained largely unchanged, the report revealed cracks in the labour market that appeared to vindicate Federal Reserve Governors Michelle Bowman and Christopher Waller, both of whom had advocated for a 25-basis point (bps) rate cut at the recent July 29-30 Federal Open Market Committee (FOMC) meeting.
Adding to the economic concerns, data from the Institute for Supply Management (ISM) confirmed that business activity in the manufacturing sector continued to operate at recessionary levels in July. Concurrently, the University of Michigan (UoM) survey indicated a deterioration in Consumer Sentiment, painting a broader picture of economic softening.
Gold’s climb on Friday followed a dive to a one-month low of $3,268 on Thursday, which had been triggered by a strong jobless claims report. However, the comprehensive July NFP report revealed a substantial downward revision of 258,000 jobs for May and June payrolls, pointing to a significantly weaker underlying jobs market than previously understood. This two-month revision was the second-largest since 1979, surpassed only by the extraordinary figures seen in April 2020.
The futures market quickly recalibrated its expectations for Federal Reserve policy. The CBOT December 2025 fed funds rate futures contract now indicates that investors are pricing in at least 57 basis points of easing by the end of the year. For the upcoming September FOMC meeting, the odds of a 25 bps rate cut, bringing the target range to 4.00-4.25%, have jumped 76 per cent.
Beyond the economic data, escalating geopolitical tensions provided a potent additional tailwind for gold. US President Donald Trump recently unveiled a wave of tariffs on dozens of trading partners, but it was his actions concerning Russia that truly unnerved markets. Following remarks from Russian Deputy Chairman Dmitry Medvedev, who accused Trump of playing a game of ultimatum with Russia and described it as a ‘step towards war,’ President Trump revealed that two nuclear submarines had been dispatched to appropriate regions.
