Shock US Jobs Report Sends Gold Soaring

Gold prices shot higher after a US jobs report that came in far worse than anyone expected. The metal rose more than 2% in one day and over 7% across the week, trading around $4,340 an ounce after touching $4,371 - its highest level since mid-June.

So what happened? The US economy lost 23,000 jobs in July, instead of adding the 80,000 that economists had forecast. On top of that, the government cut its figures for the previous two months by a combined 103,000 jobs. Wage growth also slowed, rising 3.2% instead of the expected 3.5%.

Those numbers changed the market's thinking overnight. Before the report, traders saw a 58% chance the Federal Reserve would raise interest rates in September. After it, that fell to just 30%.

The logic is simple: gold pays no interest to whoever holds it. So the lower the chance of a rate hike, the cheaper it becomes to hold gold - and the more attractive it looks.

A weaker dollar helped too. The Dollar Index dropped 0.42% to 99.54, and the 10-year Treasury yield slipped to 4.687%. Both make gold easier to buy and more appealing to investors.

One number did improve: the unemployment rate dipped to 4.1% from 4.2%. But markets weren't reassured, because the drop came mainly from Americans leaving the workforce altogether - not from more people finding work.

Key terms explained:

Jobs report: A monthly release from the US Labor Department measuring net non-farm jobs added or lost.

Data revisions: Government adjustments to previous months’ figures once more accurate information arrives.

Interest rates: The rate set by the US central bank; higher rates raise the cost of holding gold because it pays no yield.

Opportunity cost: The return an investor forgoes by holding a non-yielding asset such as gold.

Ounce: A unit of weight equal to about 31.1 grams, used to price gold globally.

Wage growth: The annual rise in average hourly earnings, seen as an indicator of inflation pressure.