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Gold edged higher on Monday, October 5, after a steep weekly decline, as a weaker-than-expected U.S. employment report reduced expectations that the Federal Reserve would raise interest rates this month. The modest advance was constrained by elevated Treasury yields and oil-driven inflation concerns, leaving investors weighing a softer labor market against continued pressure on borrowing costs.
Spot gold was up 0.4% at $4,158.60 an ounce by 5:53 a.m. ET, while U.S. gold futures rose 0.6% to $4,188.32, according to Investing.com. The figures capture early trading rather than a closing price. September’s payroll report, released Friday, showed employers added 29,000 jobs, well below economists’ expectations.
Payroll surprise shifts near-term rate expectations
The U.S. Bureau of Labor Statistics reported that total nonfarm payroll employment changed little in September, increasing by 29,000. The unemployment rate was 4.2%, up from 4.1% in August. Associated Press reporting said economists had expected roughly 90,000 new jobs, making the release a significant downside surprise.
Markets sharply reduced the probability assigned to an October rate increase after the report. Investing.com put the implied chance at about 20%, down from around 70% a week earlier; AP, citing CME Group data, reported a comparable fall from 64% to below 23%. Those are market-implied estimates, not a commitment by Fed policymakers.
Gold can benefit when investors expect rates to rise more slowly because bullion pays no interest, making it less disadvantaged relative to yield-bearing assets. Neil Welsh, head of metals at Britannia Global Markets, said in a note cited by Investing.com that the weak payroll figure eased pressure on the Fed to tighten further and offered support to gold.
September’s decline left bullion vulnerable
The Monday gain followed a sharp loss the previous week, described by Investing.com as gold’s steepest weekly decline since June. The metal also fell more than 6% in September, its largest monthly drop since June, as investors worried that energy-related inflation could keep interest rates elevated for longer.
The jobs data changed the immediate policy calculation but did not erase the forces behind that earlier selloff. The labor report offered evidence of slower hiring, while oil prices and Treasury yields remained high enough to keep the outlook for inflation and monetary policy unsettled.
Inflation concerns and yields remain a counterweight
Oil prices were rising amid conflict in the Middle East, according to the Investing.com report, which described a Saudi-backed operation targeting Houthi-controlled areas in Yemen. Higher energy costs can add to inflation pressure, potentially limiting the Fed’s room to respond to weaker employment with a slower pace of rate increases.
Treasury yields also remained elevated. AP reported that the 10-year yield briefly fell below 5.17% after Friday’s jobs release, down from a peak near 5.35% the previous day, but later recovered as oil prices pared losses. That sequence illustrates why a softer payrolls figure did not translate into an unambiguous shift in financial conditions.
Investing.com said ANZ viewed lower expectations for an October hike as supportive for gold, while high bond yields and renewed energy-inflation risks continued to limit the metal’s upside. The immediate market reaction therefore reflected competing signals rather than a settled change in the Fed outlook.
Fed minutes and inflation data are next
The Federal Reserve raised interest rates in September for the first time in three years, according to the contemporaneous Investing.com report. Minutes from that meeting were due mid-week and could provide detail on policymakers’ discussion of inflation, labor-market conditions and the pace of further tightening.
The next major scheduled inflation test identified in the report is the September consumer price index, due October 14. The release will arrive before the Fed’s October 27–28 policy meeting. The jobs report has lowered market expectations for an immediate increase, but neither the payroll figures nor market pricing alone determines the committee’s decision.
For gold, the near-term balance now turns on whether employment weakness is followed by evidence that inflation is easing, and whether Treasury yields respond. Until those signals become clearer, the pullback in October hike expectations offers support, while expensive energy and high yields remain opposing pressures.
