Gold above $2000 on jobs

Gold above $2000 on jobs

Gold solidly above $2000 on this morning’s disappointing jobs data. The yellow metal is hanging near a one-year high Wednesday as weak economic reports increased the bullion’s appeal as a hedge against uncertainty.

Private sector hiring for March dropped markedly, signaling that the U.S. economy economic is heading for a sharp slowdown. The payroll processing firm ADP reported Wednesday that company payrolls rose by just 145,000 for the month, well below the forecasted 210,000 and down from an upwardly revised 261,000 in February.

Gold also remained elevated amid heightened speculation that the Federal Reserve may pause its series of interest rate hikes on the data. That would be seen as supportive for gold. The precious metal also gained support as the dollar index traded near two-month lows, making gold cheaper for holders of other currencies.

June gold futures rallied 1.9% Tuesday to settle at $2,038.20 an ounce on Comex. The front-month contract rose 2.6% in the first two days of the week. Bullion gained 8.1% last month after decreasing 5.6% in February, its worst performance since June 2021. Gold increased 8.8% in the first quarter. The metal fell $2.40 in 2022. The June contract is currently up $5.1 (+0.25%) an ounce to $2043.30 and the DG spot price is $2025.10.

U.S. job openings dropped to the lowest level in almost two years in February, according to data released Tuesday. That’s seen as an indicator that the labor market may be cooling, which may spur the Fed to hold back or scale back on future interest rate hikes. 

The Fed has raised rates by 25 basis points twice this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November. The federal funds rate is currently at 4.75% to 5.00%. The moves are intended to curb soaring inflation

Separately, the key first-of-the-month U.S. manufacturing report from the Institute for Supply Management, released Monday, showed U.S. factory activity contracted by more than expected in March. The ISM’s gauge fell to the lowest level since May 2020. 

The next key report on the economic calendar is the U.S. monthly jobs report for March, which comes out Friday. Fed policymakers have said they track both inflation and labor market statistics when determining monetary policy. 

About 61.4% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep interest rates unchanged at the central bank’s next policy meeting in May, while 38.6% anticipate the central bank will boost interest rates by 25 basis points. 

Silver May futures gained 4.5% Tuesday to settle at $25.10 an ounce on Comex, and the metal advanced 3.9% in the first two days of the week. Silver increased 15% in March after retreating 12% in February. It edged up 0.5% in the first quarter. It advanced 3% in 2022. The May contract is currently flat, down $.01 an ounce to $25.100 and the DG spot price is $24.85.

Spot palladium slipped 0.1% Tuesday to $1,485.00 an ounce and is down 0.6% this week. Palladium rose 3.7% in March after plummeting 14% in February. It fell 17% last quarter. Palladium lost 5.7% in 2022. Currently, the DG spot price is off $5.70 a ounce to $1475.00.

Spot platinum gained 3.4% Tuesday to $1,029.00 an ounce and is up 2.9% so far this week. Platinum increased 3.7% last month after retreating 5.9% in February. It’s dropped 6.6% in the first quarter. Platinum surged 10% in 2022. The DG spot price is currently down $5.90 an ounce to $1021.10.

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