Gold boosts on the August jobs report after rallying early Friday as it heads for a weekly gain as investors anticipate a Fed rate cut.
Non-farm payrolls grew by 142,000 in August per this morning’s report from the Labor Department’s Bureau of Labor Statistics. Economists polled by Dow Jones expected a gain of 161,000. However, the unemployment rate edged down to 4.2%, in line with expectations. DG spot gold rose $11.80 on the news, while U.S. gold futures firmed 0.4% to $2,552.80, but then lost some ground on profit-taking.
Traders were looking to the monthly U.S. jobs report for confirmation of the Federal Reserve’s plans to cut interest rates later this month and for signals on the size of the reduction.
The private payrolls report from ADP Employment Report showed the smallest increase in three and a half years in data released Thursday. Separately, weekly U.S. initial jobless claims data for last week showed the biggest drop in almost a year.
Front-month gold futures rose 0.7% Thursday to settle at $2,543.10 an ounce on Comex. The most-active December contract advanced 0.6% so far this week. U.S. financial markets were closed Monday for the Labor Day holiday. Bullion gained 2.2% in August after increasing 5.7% in July, its biggest monthly gain since March. Gold fell 0.3% in June. The metal rose 13% in 2023. The December contract is currently up $0.20 (+0.01%) an ounce to $2543.30 and the DG spot price is $2513.10.
The U.S. jobs report is important because the Fed closely looks at both labor market and inflation data when crafting monetary policy. The Fed’s favorite inflation measure, the personal consumption expenditures price index, came in in line with expectations last week with July data.
Rate cuts are considered bullish for gold because they make it a more attractive investment than some other assets.
The private payrolls report from ADP missed estimates Thursday, showing a gain of just 99,000 jobs last month. Economists had forecast 140,000. New applications for unemployment benefits fell 17,000 last week to 233,000 in separate data from the Labor Department.
The Beige Book, the economic report from the Fed’s 12 regional banks, on Wednesday indicated that economic activity was flat or declining in most regions of the country. Meanwhile, U.S. factory orders in July beat expectations, separate data showed Wednesday.
Investors tracked by the CME FedWatch Tool unanimously expect the Fed to begin interest rate cuts at the central bank’s next policy meeting ending Sept. 18. About 55% expect a 25 basis point cut, while the rest anticipate a 50 basis point cut. The Fed has kept interest rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
Front-month silver futures rose 1.9% Thursday to $29.10 an ounce on Comex, but the December contract slipped 0.2% so far this week. Silver gained 0.7% last month after dropping 2.1% in July and falling 2.9% in June. It ticked up 0.2% in 2023. The December contract is currently up $0.096 (+0.33%) an ounce to $29.195 and the DG spot price is $28.86.
Spot palladium increased 1.1% Thursday to $953.00 an ounce. It’s down 2.7% so far this week. Palladium increased 3.2% last month after decreasing 4.3% in July and gaining 8.1% in June. Palladium plummeted 38% last year. The DG spot price is currently up $8.10 an ounce to $963.00.
Spot platinum rallied 2.4% Thursday to $933.60 an ounce. It increased 0.2% so far this week. Platinum slid 5.2% in August after losing 2.1% in July and falling 3.7% in June. Platinum dropped 6.8% in 2023. The current DG spot price is up $5.40 an ounce to $939.70.
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