The dollar fell and gold hit a fresh high after key US data showed the world's largest economy lost 95,000 jobs last month, far more than expected.
This will boost expectations on Wall Street that the Federal Reserve stands ready to announce more economic stimulus at its 3 November meeting.
Wall Street analysts had expected no change in job numbers or a small loss of 5,000.
The drop in non-farm payrolls came after job losses of 57,000 in August, revised from 54,000, and 66,000 in July, revised from 54,000.
Spot gold jumped to a session high of $1,343.90 an ounce after the data while the dollar dropped against the yen and the pound, falling below 82 yen and to $1.5911. Gilt futures rallied more than 10 basis points.
Rob Carnell at ING said: "With data like this, it will take a substantial pick up in inflation before the 3 November Fed meeting to prevent an announcement of more quantitative easing. We do not expect this to happen. As a result, our favoured outcome is a smaller, more incremental version of the previous quantitative easing policy, with an initial amount of perhaps $200-250bn, but promises of more if needed."
