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US Jobs Boom Dampens Fed Rate Cut Hopes
12 Feb
Summary
- US jobs increased significantly in January, exceeding expectations.
- Strong jobs data reduces immediate likelihood of Fed rate cuts.
- Gold and silver prices declined following the US employment report.
Gold prices fell in early trading on February 12, 2026, following the release of stronger-than-anticipated US jobs data. The report indicated that US payrolls increased by the most in over a year, and the unemployment rate decreased unexpectedly in January 2026. This robust performance of the American labor market suggests that Federal Reserve officials may opt to keep interest rates unchanged for the near future.
Traders have responded by adjusting their expectations for the next Federal Reserve rate cut, now largely anticipating it in July rather than June. Historically, lower interest rates benefit precious metals as they do not yield interest. Silver also saw a decline, alongside platinum and palladium. The US Dollar Spot Index showed a slight decrease in the previous session.
Economists noted that while the January jobs numbers were strong, they could be subject to revision and hiring is concentrated in specific sectors. However, the overall data is expected to alleviate fears of rising unemployment that had prompted previous rate cuts in late 2025. This economic stability supports the Fed's inclination to maintain restrictive rate levels to combat inflation.
Despite calls for rate cuts from figures like President Donald Trump, Federal Reserve officials emphasize the need for continued restrictive rates. Kansas City Fed President Jeff Schmid stated that the central bank must maintain these levels to pressure inflation. Experts suggest that the firming labor market does not immediately support calls for lower interest rates, making future policy decisions complex.
