In This Scenario, the 10-Year US Treasury Yield Moved Up While Gold and Silver Prices Declined

US nonfarm payrolls rose by 162,000 in August, surpassing market expectations of an 85,000 increase, according to data released by the Labor Department. The stronger-than-expected jobs report reduced the likelihood of a Federal Reserve interest rate cut in September, triggering a sharp decline in gold prices. The July nonfarm payrolls figure was revised to a decline of 21,000, compared with the previously reported drop of 23,000. The broad measure of unemployment, which includes discouraged workers and those holding part-time jobs for economic reasons, fell to 7.8% in August from 8.3% in the prior month.

Following the data release, the CME FedWatch tool showed the probability of the Fed keeping rates unchanged in September rose by 10 percentage points to 59%, up from 49%. The dollar index (DXY) climbed to 99.35 from 99.015. Spot gold, which typically moves inversely to the dollar, fell by $100 to $4,370 per ounce from around $4,470. Strong employment data reduces the case for rate cuts, which tends to push Treasury yields higher. In this scenario, the 10-year US Treasury yield moved up while gold and silver prices declined.