US job growth topped expectations in September but the unemployment rate continued its march higher, underscoring the lingering fragility of the labour market.

It will be the last jobs report the Fed sees before its Dec 9-10 meeting, and officials are divided over whether the slowdown in the labor market justifies another rate cut then.

Given that the data showed job growth topping expectations, “there is no reason to think the Fed is going to be more aggressive on easing monetary policy,” said Bart Melek, global head of commodity strategy at TD Securities. “The market was already thinking a December cut is not a sure bet. The jobs data just confirms this.”

Prior to the print, swap traders had already priced out a rate reduction next month following the government’s cancellation of the October employment report.

While slightly increasing their wagers of a December cut after the jobs report, the traders still see a less than 50% chance of a rate reduction next month. Bullion typically underperforms in a higher rate environment.

After the jobs report, Chicago Fed president Austan Goolsbee signalled that he’s still apprehensive about delivering another rate cut at the central bank’s December meeting.

Inflation “seems to have kind of stalled out and, if anything, given warnings of going the wrong way,” Goolsbee said Thursday at an event in Indianapolis. “So that makes me a little uneasy.”

Gold has rallied strongly this year, gaining more than 50% and hitting a record in October before retracing some of its gains. The advance has been supported by two earlier rate cuts from the Fed, as well as elevated central-bank buying and inflows into bullion-backed exchange-traded funds.

Gold slipped 0.5% to US$4,059.54 an ounce at 1.54pm in New York. The Bloomberg Dollar Spot Index was up 0.1%. Silver, platinum and palladium all fell.