The previous five weeks had seen gold fail to record any positive weekly performance.
May's number was downwardly revised to 129,000.
Before Thursday's jobs report was released, the market assigned roughly a 65% probability to a September rate hike. After the report, that probability dropped to 53.5%, according to the CME's FedWatch tool, after the Fed held rates steady in July.
OCBC strategists said: "The softer-than-expected payrolls data helps reduce the hawkish tail risk."
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Gold's 66% surge in 2025 was driven by high inflation and safe-haven demand, but the subsequent pullback - down 3% year to date - reflected a repricing of interest rate expectations as the Fed maintained a hawkish posture. Friday's labor market data, coming in well below expectations, now suggests that the economy may be cooling faster than anticipated, potentially giving the Fed room to adopt a more dovish stance. This has revived interest in gold as a hedge against a weaker dollar and lower real yields.
Spot silver climbed 2.9% to $62.77 an ounce, on pace for a weekly rise of about 6.7%. Silver futures for August delivery gained 3.5%. Spot platinum was trading 2.8% higher at $1,660.10, and palladium added roughly 1% to $1,280.09.
Despite this week's bounce, gold is still down 3% year to date. Silver is down 12%. But last year, gold surged 66% over the course of 2025 and silver surged 135%.
The recent weakness is a pullback from January's all-time high of over $5,300 per ounce. At Friday's level, gold was trading at a discount of around 22% from that peak.
OCBC strategists said: "Near term, we would shift the tone from cautious to cautiously constructive. Gold can extend the recovery if incoming US data continue to cap real yields and the USD." They added: "A more durable recovery in gold needs real yields to ease more decisively, ETF/investor demand to stabilize and Fed to step back on its hawkish rhetoric." And: "Technically, risks are skewed to the upside."
The rally comes as investors reassess the Federal Reserve's next move. The soft labor market reading reinforced expectations that the central bank may have room to ease policy sooner than previously thought, especially after holding rates steady in July. Gold's steep year-to-date decline - after a record-breaking 2025 - reflects earlier fears of sustained high rates, but Friday's data suggests those fears may be overblown. A more dovish Fed could weaken the dollar and lower real yields, both tailwinds for the metal.
With inflation showing signs of cooling and the labor market softening, traders are now pricing in a higher chance of rate cuts by year-end, which historically benefits non-yielding assets like gold.
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