Gold and silver jump after negative U.S. jobs report

Gold hit a one-week high Friday after a U.S. jobs report fell short, marking a slower economy and decreasing expectations the Federal Reserve would soon raise interest rates.

U.S. jobs increased by 151,000 in August, against an expected increase of 180,000, according to Reuters. The dollar fell  0.11 percent against major currencies.

Gold rose 0.8 percent to $1,312.79 an ounce by 1 p.m. in London, after hitting a morning high of $1,328.73 after the the non-farm U.S. payrolls data.

"The market was not expecting such a glum number from the U.S. ... it's evidence that the U.S. economy is still not strong enough to sustain another rate hike and that's positive for Gold," Jonathan Butler, commodities analyst at Mitsubishi, told the British news agency.

"This number means rate hikes could get pushed further into the future and gold will benefit from safe-haven buying and expectations that the macro environment will continue to be favorable for even longer."

In Asia, demand for gold edged up this week as a correction in prices prompted consumers to buy for the upcoming festival and wedding season, with discounts in India narrowing to their smallest in three months.

In the U.S., gold futures headed for their biggest gain in a month, according to Bloomberg.

“Traders are bidding up gold because they think the jobs number isn’t strong enough to justify two rate hikes this year,” Phil Streible, a senior market strategist at RJO Futures in Chicago, told the New York news agency. “Lower interest rates means a weaker dollar and gold moves up on that.”

The Bloomberg Dollar Spot Index fell for a second day after four straight gains.

Gold has soared 26 percent this year as doubts about the U.S. economy compelled the Federal Reserve to consider delaying an increase in interest rates this year. A decision by Britain to exit the European Union also raised expectations of an economic downturn in Europe.

Higher interest rates dampen investors’ appeal for gold, which doesn’t pay interest and struggles to compete with yield-bearing assets when borrowing costs rise. They can also boost the dollar, for which gold is priced, making it more expensive for holders of other currencies.

Before Friday’s jobs report, the metal was headed for a second straight weekly decline on fears that an interest-rate increase could come as early as September. On Thursday, it touched the lowest since June 24, Bloomberg said, the day prices surged on demand for a haven following the the U.K.’s vote to exit the European Union.

In an August speech, Fed Chairwoman Janet Yellen said the case for a rate increase had strengthened, and the central bank would continue to watch economic data, according to Dow Jones Business News..

The data "probably puts in doubt that the Fed will make a move in September," Ira Epstein, a strategist with the Linn Group, told the news agency. "This number didn't offer them the cover they needed."

In other metals, silver rose more than 2 percent after the jobs data, touching a two-week high of $19.29, while platinum increased 0.8 percent to $1,053.20 an ounce.