Weak U.S. Jobs Report Lifts Gold Above $4,100; Oil Steady Ahead of Holiday

Spot gold traded around $4,130 an ounce in early Asian dealing on July 3, extending gains after U.S. June nonfarm payrolls badly missed expectations and prompted traders to scale back bets on Federal Reserve rate hikes this year. U.S. crude hovered near $68.46 a barrel, supported by pre-holiday supply coverage and short-covering ahead of the U.S. Independence Day long weekend. U.S. equities ended Thursday mixed. The Dow Jones Industrial Average rose 1.14% to a record close of 52,900.07. The S&P 500 finished slightly higher at 7,483.24, while the Nasdaq fell 0.80% to 25,832.67. The June jobs report showed payrolls increased by 57,000 versus forecasts of 110,000. The unemployment rate came in at 4.2%, a touch below the expected 4.3%. CME FedWatch showed the probability of a September rate hike fell to 55% from 64.1%. Adam Sarhan, CEO of 50 Park Investments, said the data did not eliminate inflation concerns but eased near-term pressure for additional tightening. Bruce Zaro, managing director at Granite Wealth Management, said the sharp drop in chip stocks reflected profit-taking after strong year-to-date gains. The Philadelphia Semiconductor Index sank 5.4% even as it remained up about 78% for the year; NVIDIA fell 1.4% and SanDisk dropped 14.1%. Apple climbed 4.8% after Nikkei Asia reported it plans to launch five new iPhone models. Tesla slid 7.5% despite record second-quarter deliveries. Vimeo's parent, Bending Spoons, fell 11.3% on its second day of trading. For the week, the Dow rose about 2%, the S&P 500 gained 1.8%, and the Nasdaq added 2.1%. U.S. markets were closed Friday for the Independence Day holiday. Gold jumped more than 2% on Thursday, with spot gold at $4,123.61 an ounce, up 2.3%. The rally was driven by the weak payrolls print and a softer U.S. dollar, which improved the appeal of dollar-denominated bullion for non-U.S. investors. CME FedWatch indicated the probability of a rate hike before September fell from 66% before the data to around 51% after. David Meger, director of metal trading at High Ridge Futures, said weaker employment data reduces the likelihood of rate increases later this year and that lower-rate backdrops typically support gold. The World Gold Council said central banks returned to net buying in May, lifting official reserves by 41 tons. Other precious metals also advanced: spot silver rose 3.15% to $60.94, platinum gained 2.6% to $1,617.00, and palladium climbed 4.7% to $1,267.14. Oil prices edged higher on Thursday. Brent settled up 0.58% at $71.54 a barrel and U.S. crude ended up 0.54% at $68.46. Buying was linked to supply coverage ahead of the holiday and short-covering. Again Capital's John Kilduff said market attention has shifted from how much supply is being lost to how much supply is being added. Both benchmarks had earlier touched their lowest levels since before the U.S.-Iran war broke out in late February. Qatar, acting as a mediator, said the United States and Iran have made progress toward a permanent peace agreement to end the four-month conflict that disrupted oil flows through the Strait of Hormuz. SEB chief commodities analyst Bjarne Schieldrop noted that oil continues to move through the strait and countries have been tapping strategic reserves. EIA data released Wednesday showed U.S. crude inventories fell to their lowest level since 2018 on strong refinery demand, while gasoline stocks also declined. Separately, Nigeria became the first OPEC member to join the International Energy Agency as an associate member. Ukraine's General Staff said Thursday it struck a Lukoil refinery in Russia's Nizhny Novgorod Oblast. In currencies, the U.S. dollar index fell 0.54% on Thursday to 100.85 after hitting 100.55, its lowest since June 18, marking its biggest one-day drop since April 30. Fed funds futures repriced sharply, with traders now assigning a 54% chance of a rate hike before September versus 67% ahead of the jobs report. EUR/USD rose 0.52% to 1.1435 after touching 1.1472, its highest since June 22. The pound and Australian dollar also gained. Sarah Ying, head of FX strategy at CIBC Capital Markets, said the weakness was concentrated in leisure and hospitality and could be seasonal, but it still moved markets. Fed Chair Walsh said Wednesday the central bank remains committed to its 2% inflation goal, adding that inflation expectations and risks have eased somewhat in recent weeks. Ying said that unless labor data keeps disappointing, the AI-driven capital flow narrative may continue to support the dollar. USD/JPY dropped 0.91% to 161.09 after touching 160.63, its lowest since June 18 and the steepest daily fall since April 30. Traders cited a shift in Japan's Ministry of Finance communication strategy: sources said officials are moving away from pre-signaling intervention risk and toward more targeted, forceful steps designed to deter speculators and lift short-selling costs without referencing specific exchange-rate levels. The ministry declined to comment. Some traders speculated officials may have conducted rate checks, often seen as a precursor to intervention. RBC Capital Markets' Abbas Keshvani said more data is needed to confirm intervention, though the timing suggests the possibility. International developments U.S. President Trump said in an interview Thursday that talks with Iran are progressing and that Iran has "almost agreed to everything we asked for." He said Washington is not pursuing regime change and reiterated the U.S. position that Iran must not obtain nuclear weapons. Trump also defended recent U.S. military actions, saying Iran had been "completely defeated militarily" and claiming the United States struck Iran after drones were used against a ship. Mediators from Qatar and Pakistan said the next round of U.S.-Iran talks will resume "as soon as possible" after the funeral of former Iranian Supreme Leader Ali Khamenei, who was killed in a U.S.-Israel airstrike on Feb. 28, 2026. The funeral is scheduled for July 4–9. Iran has not issued an official response, and has previously said its stance depends on U.S. steps on sanctions relief and the release of frozen assets. Oil supply and Hormuz A source said Kuwait raised crude output in June after a temporary U.S.-Iran peace agreement, signaling a recovery in shipments through the Strait of Hormuz following wartime disruption. Kuwait produced about 2.5 million barrels per day before the near-blockade; Gulf producers including Kuwait, Saudi Arabia and Iraq were forced to cut output by millions of barrels per day. The source said Kuwait's output peaked at 1.9 million barrels per day in the final 10 days of June. The report also said the United States and the UAE unfroze Iranian overseas funds in exchange for Iran dropping transit tolls in Hormuz, but Iran did not accept the condition. The United States and Oman are seeking ways to pressure Tehran to abandon the fee stance. People familiar with the matter said U.S. envoys Steve Witkoff and Jared Kushner traveled to Doha this week to consult Qatari mediators on implementing last month's preliminary agreement to reopen the strait. Iran's Islamic Revolutionary Guard Corps' Khatam al-Anbia Central Command said on July 2 that Iran would respond "firmly and swiftly" to any U.S. interference in the Strait of Hormuz, warning that U.S. aircraft activity over the area could undermine security. On July 1, U.S. Central Command said a U.S. Navy Sea Hawk helicopter made an emergency water landing in the Arabian Sea; three of four crew members were rescued and one remained missing, with no indication the landing was caused by hostile action. Iranian officials and regional diplomats said Oman has proposed a service-fee framework for ships using the Strait of Hormuz. A regional diplomat described the mechanism as voluntary, drawing on arrangements in the Strait of Malacca and the Singapore Strait that rely on contributions to support maritime safety, while Iranian officials said the fees would be mandatory. FedWatch probabilities CME FedWatch showed markets pricing an 82.4% chance the Fed holds rates steady in July and a 17.6% chance of a cumulative 25-basis-point hike. By September, the odds implied a 46.8% chance of no change, 45.6% chance of a cumulative 25-basis-point hike, and 7.6% chance of a cumulative 50-basis-point hike. By December, pricing implied a 23.5% chance of no change, 42.2% chance of a cumulative 25-basis-point hike, and 34.3% chance of at least a 50-basis-point hike. China domestic China's Ministry of Commerce said on July 2 that agricultural trade is an important part of China-U.S. economic and trade cooperation. Spokesperson He Yadong said that following recent consultations, both sides have set guiding objectives to expand bilateral agricultural trade and have agreed in principle to include certain agricultural products in a reciprocal tariff-reduction framework. He said companies will conduct trade based on market principles and demand conditions, and China is willing to work with the United States to create favorable conditions for bilateral agricultural trade.