Gold's worst week since June ended with a three-minute crash.
The metal shed roughly $90 an ounce in the minutes after the Labor Department reported that U.S. employers added 162,000 jobs in August, nearly triple the consensus estimate, according to BullionVault. Spot gold bottomed at $4,367 before clawing back above $4,400, and CNBC reported the decline exceeded 2 percent at its worst.
By afternoon the damage looked more contained. Trading Economics quoted spot gold at $4,433.73, down $39.90 or 0.89 percent on the day. October gold futures settled at $4,451.10, down $53.80 or 1.19 percent, RTTNews reported. Even so, gold finished the week down about 3 percent, its steepest weekly loss since mid-June, and well off the $4,510 high it touched earlier in the week.
Silver Breaks $65
Silver, which had rebounded 6.6 percent from Wednesday's one-week low, gave back half that gain in a single session. The metal briefly dipped through $65 an ounce before recovering to $66.20, down 1.14 percent, according to Trading Economics. October silver futures fell 98 cents, or 1.47 percent, to $66.18.
Fortune's morning snapshot had silver at $65.54 at 9 a.m. ET, still up more than 61 percent from a year earlier and 12.65 percent higher than a month ago. Gold traded at $4,389.85 at the same hour, putting the gold-silver ratio near 67.
The Report That Moved the Market
The August payrolls figure crushed forecasts of roughly 56,000, and July's initial loss of 23,000 jobs was revised to a gain of 21,000. June and July revisions together added more than 50,000 positions. The unemployment rate held at 4.1 percent while annual wage growth eased to 3.1 percent.
For the precious metals market, the takeaway was simple. A labor market this sturdy gives the Federal Reserve no reason to wait on inflation.
"Gold stumbles badly as a huge headline print, and an overall strong report, makes a September rate hike much more likely unless we get a weak CPI report," independent analyst Tai Wong told CNBC.
Short-term interest-rate futures moved to price about a 65 percent chance of a quarter-point increase at the Fed's September 15-16 meeting, up from roughly 55 percent before the release, CNBC reported. BullionVault put the shift at three-in-five odds from a coin flip the day before, with the effective fed funds rate currently at 3.63 percent and the year-end consensus climbing back toward 4.00 percent.
Yields at a 2023 High
Treasury yields did the rest of the work. The 10-year yield pushed toward 4.80 percent, its highest since November 2023, according to BullionVault. Higher real yields raise the opportunity cost of holding non-yielding bullion, and the stronger dollar that accompanied the move compounded the pressure on both metals.
The selloff also unwound Thursday's relief rally, when Fed Governor Christopher Waller signaled he could support holding rates if inflation kept cooling. Waller was explicit about the alternative. "If inflation comes in hot, I would consider a rate hike," he said, referring to the August data due next week.
CPI Is Now the Whole Game
That makes next week's consumer and producer price reports the deciding inputs for the Fed and for gold. With hiring strong, unemployment steady and wage growth moderating, a soft inflation print would give doves like Waller room to argue for patience. A hot one would leave the committee with little cover to hold.
Gold remains up 23.42 percent over the past year and 4.39 percent for the month even after Friday's slide, Trading Economics data show. Silver is up 6.74 percent on the month. The longer-term bull case has not broken. But for the next seven days, the metals will trade on a single number.
Sources: CNBC, BullionVault, Trading Economics, RTTNews, Fortune, FXStreet