Gold falls as US rate-cut odds fade

Gold prices eased to around $4,030 per ounce on Friday, putting the metal on track for a weekly loss as hopes for a December Federal Reserve rate cut continued to fade in the wake of stronger-than-expected US labor data.

The highly anticipated Labor Department report, delayed by the government shutdown, showed that September nonfarm payrolls rose by 119,000, more than double the consensus forecast of 50,000.

The upside surprise suggested that while the labor market has cooled from its post-pandemic peak, it remains resilient enough for the Fed to maintain a cautious stance.

At the same time, the report contained mixed signals. The unemployment rate climbed to 4.4%, the highest since October 2021 and slightly above expectations, offering evidence of softening conditions beneath the surface.

Wage growth, however, came in at 3.8%, marginally higher than anticipated, reinforcing the Fed’s concern that inflationary pressures have not fully dissipated. Analysts noted that this blend of stronger hiring but rising unemployment supports the Fed’s narrative of a labor market that is gradually rebalancing—but not weak enough to justify immediate easing.

Complicating matters further, the Bureau of Labor Statistics confirmed it will skip the October employment report, folding its data into November’s release due to shutdown-related disruptions. This creates an unusual gap in economic visibility heading into the December FOMC meeting, increasing policymakers’ reliance on partial indicators and private-sector data.

Several Federal Reserve officials have recently urged caution on rate cuts, emphasizing that the central bank should avoid acting prematurely while inflation remains above target.

As a result, traders now assign only a 40% probability of a December rate cut, down sharply from levels seen just a few weeks ago.

With the dollar firming and Treasury yields holding steady, gold has struggled to gain traction in the near term. Still, analysts note that ongoing data uncertainty, geopolitical tensions, and strong year-to-date performance continue to provide a supportive backdrop for bullion over the longer horizon.