Gold rallies to $4,254 after soft U.S. jobs data crushes Fed hike pricing

Gold climbed more than 1% on Friday after a weaker-than-expected U.S. employment report drove Treasury yields lower and sharply pared back expectations for another Federal Reserve rate increase this month. Spot gold rose to about $4,223 an ounce, while U.S. gold futures touched roughly $4,254. September payrolls showed the U.S. economy added 29,000 jobs, well below the 90,000 consensus estimate. The unemployment rate edged up to 4.2%. July and August job gains were also revised down by a combined 60,000. Rate markets moved quickly. Investors cut the implied probability of an October Fed hike to around 14%, from about 70% earlier in the week. The 10-year Treasury yield fell toward 5.17%, and the 2-year yield slid to around 4.72%. The shift marks a sharp reversal from the reaction to the strong August jobs report, which had pushed yields higher and weighed on bullion. Friday's rebound also follows a recent drop in gold below $4,200, as rising oil prices and higher Treasury yields reignited inflation concerns and dragged bullion to its weakest level since early August. Morgan Stanley has said $4,000 could be a key floor, citing central bank demand, physical buying and the potential for lower long-term yields. The firm's view received fresh support as Treasury rates declined, with lower yields still seen as a key catalyst for renewed upside in gold.