By: Economy Middle East

Gold prices climbed more than 1 percent on Friday and were headed for their first weekly advance in five weeks, as weaker-than-expected U.S. employment data reduced expectations of further interest rate hikes by the Federal Reserve.

As of 5:59 GMT, spot gold rose 1.15 percent to $4,171.20 an ounce, reaching its highest level since June 23. Meanwhile, U.S. gold futures for August delivery gained 1.40 percent to $4,183.37 an ounce.

In the UAE, gold rates rallied, with 24-carat gold gaining AED8.75 to AED503.5 and 22-carat gold rising AED8.25 to AED466.25.

In addition, 21-carat gold edged AED8 higher to AED447.25, while 18-carat gold ticked up AED6.75 to AED383.25

Meanwhile, 14-carat gold gained AED5.25 to AED299.

Markets lower Fed rate hike expectations
Gold prices were on course to post a weekly gain of 2.01 percent, marking the first weekly advance since May 29, as softer-than-expected nonfarm payrolls and private payrolls figures eased inflation concerns and lowered expectations that interest rates would remain elevated for an extended period.

The U.S. dollar was on track for a weekly decline, making gold, which is priced in the greenback, less expensive for buyers using other currencies.

Meanwhile, U.S. nonfarm payrolls increased by 57,000 jobs in the previous month, well below economists’ expectations. Following the weaker-than-expected labor market data, traders lowered their expectations for a September interest rate hike.  Markets are now pricing in around a 54 percent probability of an increase, down from 66 percent before the payrolls report, according to the CME FedWatch Tool.

Higher interest rates generally reduce the appeal of non-yielding assets such as gold by increasing the attractiveness of interest-bearing investments. However, analysts noted that expectations of additional rate hikes have not completely faded.

Gold’s trajectory to remain tied to interest rate expectations and inflation dynamics Separately, the World Gold Council reported that central banks resumed gold purchases in May, with official reserves rising by a net 41 metric tons based on the latest available data.

The trajectory of gold prices in the first half of the year was defined by extremes. The metal reached more than 12 all-time highs, peaking at $5,405 per ounce in late January before retreating sharply to $4,002 per ounce in June. This movement translated into a 7 percent year-to-date decline, alongside a rise in average volatility to 30 percent.

Despite this correction, gold continues to rank among the strongest-performing asset classes over the past year, reflecting sustained underlying demand even amid price consolidation.

Looking ahead, the World Gold Council says gold’s trajectory remains closely tied to interest rate expectations and inflation dynamics. Current pricing suggests markets are aligned with expectations of at least one Federal Reserve rate hike in 2026, likely around October, alongside tightening cycles from the Bank of England, Bank of Japan and European Central Bank.

Other precious metals

Among other precious metals, spot silver advanced 2.3 percent to $62.41 per ounce, platinum gained 2.5 percent to $1,656.05, and palladium added 1 percent to $1,281. Tracking gold prices, all three metals traded near their highest levels in more than a week and were on track to post weekly gains.