Gold falls as U.S. payrolls surge by 165,000, strengthening December Fed hike case - Kitco AM Report

(Kitco NewsWire) – Spot gold prices were lower and spot silver prices were modestly higher in early U. S. trading Friday, as investors assessed the latest U. S. employment figures following Thursday's sharp equity-market selloff and renewed tensions involving Iran and the Strait of Hormuz. The U. S. economy added substantially more jobs than expected in October, reinforcing the case for another Federal Reserve interest rate increase in December and driving Treasury yields and the dollar higher immediately after the release. At the time of writing, spot gold was trading near $4,050.95 an ounce, down $34.10, or 0.89%, while spot silver was trading near $51.864, up $0.089, or 0.17%.

The unemployment rate declined to 4.1% from 4.2%, while average hourly earnings increased 0.4% on the month, above expectations for a 0.3% gain.

Before the report, interest rate futures indicated approximately a 70% probability of a 25-basis-point increase at the Fed's Dec. 8-9 meeting, as concerns about slowing artificial intelligence investment and Thursday's heavy equity losses had reduced expectations for further tightening.

The two-year Treasury yield rose approximately 6 basis points to 4.53% following the release, while the dollar also advanced.

Gold therefore faces competing influences from defensive investment demand and higher interest rates, while silver remains particularly exposed to industrial-demand concerns and broader risk appetite.

EST. September headline consumer prices increased 0.6% on the month and 3.7% annually, leaving inflation well above the Fed's 2% objective.

Stronger consumer inflation or an increase in longer-term inflation expectations would reinforce the implications of the employment surprise for December rate policy, while softer inflation figures could help offset some of the pressure from resilient hiring.