A weaker-than-expected US jobs report showed the labor market contracted in July, prompting investors to scale back expectations for a Federal Reserve rate hike.
Gold prices climbed to a seven-week high as lower rate expectations boosted demand for bullion.
Oil prices remained volatile as markets assessed negotiations over transit through the Strait of Hormuz amid ongoing Middle East tensions.
Meanwhile, the US Senate approved a new sanctions bill targeting Russia while expanding the president’s authority to impose tariffs on major buyers of Russian energy.
US jobs report points to slowing labor market
The US labor market unexpectedly contracted in July, marking the first monthly decline in nonfarm payrolls in years and reinforcing concerns that hiring momentum is weakening.
According to the Bureau of Labor Statistics, nonfarm payrolls fell by a seasonally adjusted 23,000 jobs in July after a downwardly revised decline of 20,000 in June.
Economists had expected payrolls to increase by about 83,000 jobs during the month.
The report also included significant downward revisions to prior months, with payroll gains for May and June revised lower by a combined 103,000 jobs.
Despite weaker hiring, the unemployment rate edged down to 4.1% from 4.2%, largely because labor force participation declined to 61.4%, its lowest level in more than five years.
Average hourly earnings rose just 3.2% from a year earlier, below expectations.
Following the report, traders reduced expectations for a September Federal Reserve rate hike.
According to CME Group’s FedWatch tool, the probability of a September increase fell to 44%, while US stock futures advanced and Treasury yields declined as investors anticipated a less aggressive monetary policy path.
Gold jumps as rate hike expectations ease
Gold rallied sharply after the weak employment report reduced expectations for additional Federal Reserve tightening.
Spot gold climbed 2.3% to $4,340.19 per ounce after rising more than 3% earlier in the session, reaching its highest level since June 17. US gold futures also gained 2.53% to settle at $4,408.
The precious metal is on track for its strongest weekly performance since January, advancing more than 7% over the week.
Markets also adjusted interest rate expectations following the payroll report.
UBS also reiterated its bullish outlook, forecasting that gold could reach $5,000 per ounce during the first half of 2027.
Oil prices remain volatile amid Hormuz negotiations
Oil prices traded lower as investors continued assessing negotiations between Iran and Oman over shipping through the Strait of Hormuz.
Brent crude fell to $81.93 per barrel while West Texas Intermediate climbed to $76.91.
Although both benchmarks rebounded on Friday, they remained on course for weekly losses exceeding 9% after earlier optimism surrounding a possible diplomatic breakthrough weighed on prices.
Markets continued to monitor discussions over a proposed transit framework for the Strait of Hormuz.
Reports indicated Iran is seeking transit fees of between 5% and 7% of cargo value, while Oman has discussed lower fees and the United States continues to oppose such charges.
Investors also remained focused on regional security risks after Saudi Arabia warned of possible coordinated attacks on civilian and energy infrastructure, while Yemen’s Houthi forces claimed missile and drone strikes on Saudi deployments.
US Senate approves Russia sanctions bill
The US Senate overwhelmingly approved legislation that would expand sanctions on Russia while granting President Donald Trump broader authority to impose tariffs on countries purchasing Russian energy.
The measure passed by an 86-11 vote and now heads to the House of Representatives.
Under the legislation, the president would be authorized to impose tariffs of up to 100% on the largest buyers of Russian crude oil and natural gas, as well as countries accused of helping Russia evade energy sanctions.
The bill also allows tariffs of up to 500% on Russian goods imported into the United States.
The legislation would also extend the Iran Sanctions Act through 2031.
While lawmakers from both parties described the measure as a stronger tool to pressure Moscow, critics argued its effectiveness will ultimately depend on whether the White House chooses to use the expanded authorities, as the bill includes broad presidential waiver powers.
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