Gold, silver jump 3%. Here's what's driving the rally
What's the story
Gold and silver prices have witnessed a spike of up to 3% in international markets on Friday. The surge comes as the US non-farm payrolls report showed only 57,000 jobs were added last month, way below the expected 110,000. This weak jobs report has lowered the expectations of a rate hike by the Federal Reserve, making precious metals a much more attractive place for investors to park their money.
Price surge
Gold surges to over $4,200 per ounce
On Friday, COMEX gold prices jumped nearly 2% to $4,202.80 per ounce, hitting an intraday high of $4,206.70/ounce. Meanwhile, COMEX silver prices also rose sharply by 2.82% to $62.785/ounce. Following the latest US non-farm payrolls data, traders have cut back on September rate hike expectations, further boosting sentiment across bullion markets. This is because lower interest rates make non-yielding assets like gold and silver more attractive to investors.
External factors
Geopolitical developments also contribute to safe-haven buying interest
Falling crude oil prices have also eased inflation concerns, further contributing to the bullish trend in the bullion market. Geopolitical developments such as renewed Iran-US talks over the Strait of Hormuz have also contributed to safe-haven buying interest. These external factors, along with economic uncertainty and investor positioning, are driving the current rally in gold and silver prices.
Future outlook
Central bank demand supportive of gold prices
Central bank demand has also been supportive of gold prices, with the World Gold Council reporting a net increase of 41 tons in official gold reserves globally in May. Analysts are now looking at upcoming US inflation data and comments from Federal Reserve officials for further direction in bullion prices. For now, softer economic signals have shifted sentiment back toward gold and silver.