June gold GCM6, +1.37% already bouncing up ahead of the closely watched report, soared $10 higher, gaining $21.70, or 1.7%, to end at $1,294 an ounce. The turn higher helped the yellow metal log a modest weekly gain of 0.3%.
Providing runway for gold to rise on the day was a modestly weaker dollar as measured by the ICE U.S. Dollar Index DXY, +0.07% a gauge of the greenback’s strength against a basket of six rival currencies. The dollar index was relatively flat, but up 0.7% for the week.
Weakness in the labor picture is bullish for gold prices, and may help to affirm the Fed’s go-slow approach to normalizing benchmark interest rates, which have remained ultralow. Reluctance to raise rates would be a drag on the buck and deliver a boost to dollar-denominated assets, like gold.
“This precious metal is bullish on the daily timeframe and the diminishing expectations that U.S. rates may be increased in 2016 may have provided an opportunity for bulls to install a round of buying momentum…,” said Lukman Otunuga, research analyst at FXTM in a Friday morning research note.
An earlier reading of private-sector employment on Wednesday sowed seeds of doubt that labor market reports would continue to be a source of strength in the economy.
Private-sector employment gains slowed markedly in April, according to a report released by Automatic Data Processing on Wednesday. Employers added 156,000 jobs in April, the ADP report showed—the weakest estimate since February 2014.
On Thursday, a report of jobless claims indicated that the number of Americans collecting unemployment benefits is at a nearly 16-year low.
But worries about weak corporate quarterly results and tepid readings of productivity have bolstered the case that the U.S. economy is slowing.
“Now that the slipping global economy is bearing testimony to the sweeping tide of deflation and the U.S. dollar is likely to weaken further from now on, we expect $1,300 [an ounce] to be attacked again and this time more successfully,” said Julian Phillips, founder of and contributor to GoldForecaster.com.
Meanwhile, July silver SIN6, +1.03% also drew bidders, rising 20 cents, or 1.2%, to settle at $17.527 ounce. Silver has lost 1.6% on the week.
In metals stocks, the exchange-traded SPDR Gold Trust GLD, +0.91% was up 0.9% higher in premarket trade while its silver counterpart, the iShares Silver Trust SLV, +0.73% was up a modest 0.7%.
Elsewhere in the metals complex, high-grade copper HGN6, -0.09% for July delivery ended unchanged at $2.1540 a pound, July platinum PLN6, +1.77% picked up $21.30, or 2%, to close at $1,085.10 an ounce, while June palladium PAM6, +1.29% advanced $6.50, or 1.1%, to settle at $607.20 an ounce.