Trump presses Fed after stronger jobs report, gold falls

President Donald Trump renewed pressure on the Federal Reserve on Friday after the Labor Department reported stronger-than-expected job growth in August and gold prices fell.

In a social media post directed at Fed Chair Kevin Warsh and other policymakers, Trump wrote, “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.” He also argued the United States should target a policy rate near 1% or even 0.5% rather than the level near 4% at the time. The president defended earlier threats to curb trade with countries including Switzerland, Mexico and the European Union; legal experts warn such restrictions could face legal challenges.

The Bureau of Labor Statistics reported nonfarm payrolls rose by 162,000 in August, above the 53,000 increase economists had expected. The unemployment rate remained at 4.1%. July payrolls were revised to show a gain of 21,000 jobs, reversing a previously reported loss of 23,000. August marked the largest monthly payroll increase since March. Average hourly earnings rose 0.3% for the month and 3.1% from a year earlier.

Markets reacted to the stronger labor data by increasing the probability of a Federal Reserve rate increase in September. Traders priced roughly a 60% chance of a hike, with short-term interest-rate futures implying about a 65% probability. The stronger report lifted the U.S. dollar and reduced demand for assets that pay no interest.

Precious metals fell after the payrolls release. Spot gold dropped 0.79% to $4,437.61 an ounce and briefly slid to an intraday low of $4,364.99. U.S. gold futures for December delivery fell 1.35% to settle at $4,478.70. Analyst Tai Wong noted, “gold had stumbled after the strong jobs report made a September rate hike more likely unless upcoming CPI data proved weak.” Markets were awaiting next week’s consumer and producer inflation readings for further signals on the Fed’s policy path.

Crude oil reversed earlier losses and remained on track for a strong weekly gain amid renewed U.S.-Iran military exchanges. Brent traded around $96.27 a barrel and West Texas Intermediate near $91.48. Brent was up about 7.6% for the week and WTI had gained roughly 9.6%. Norbert Rucker, head of economics and next-generation research at Julius Baer, commented that oil appeared to be in a phase where recurring hostilities repeatedly revived a risk premium in prices and added there was no sign the latest escalation had materially affected Middle Eastern exports.

Several banks adjusted short-term Brent forecasts after the price moves and geopolitical risks. Citi raised its third-quarter average Brent forecast to $86 a barrel from $80, and ANZ lifted its near-term Brent forecast to $95, warning of additional upside if the conflict intensifies.

Policy makers, traders and investors were set to focus on upcoming consumer and producer inflation reports for clearer guidance on the Federal Reserve’s next move.