Gold boosts this morning on a slipping dollar and the release of jobs numbers for February that included a small sign of hope for the Fed.
While February’s jobs numbers rose, beating expectations, it was still a deceleration from an unusually strong January. Nonfarm payrolls rose by 311,000 per the Labor Department’s Friday report, beating the 225,000 estimate. And there are two numbers that give Fed watchers (and the yellow metal) hope. The unemployment rate rose to 3.6%, above the expected 3.4% and while average hourly earnings rose 4.6% from a year ago, that was below the estimate of 4.8%.
Following this morning’s boost, gold is flat for the week. The precious metal had dropped after Federal Reserve Chairman Jerome Powell told Congress that interests are “likely to be higher” than previously anticipated as the central bank strives to tackle soaring inflation.
Front-month gold futures rose 0.9% Thursday to settle at $1,834.60 an ounce on Comex, though the April contract dropped 1.1% in the first four days of the week. Bullion decreased 5.6% last month, its worst performance since June 2021. It increased 6.5% in January and gained 3.8% in December. The metal fell $2.40 in 2022. The April contract is currently up $28.4 (+1.55%) an ounce to $1863.00 and the DG spot price is $1859.90.
Powell’s comments about rate hikes were bearish for gold this week because interest rate increases typically make the metal less attractive as an alternate investment. His comments Tuesday during his first day of testimony increased expectations of a bigger interest rate hike at the Fed’s next meeting later this month, though he scaled them back somewhat in testimony Wednesday.
“We have no made any decision about the March meeting,” he told the House Financial Services committee Wednesday. “We have some potentially important data coming up,” he said, referring to Friday’s jobs report and consumer price data that comes out March 14.
Investors tracked by the CME FedWatch Tool increased their bets that the Fed will boost rates by 50 basis points at policymakers’ next meeting March 22. The tool shows 56.1% of investors expecting a 50-basis-point hike, with the remaining 43.9% betting on the Fed to raise rates by 25 basis points. A week before, 71.6% of investors were betting on a 25-basis-point increase.
Earlier this week the ADP employment report showed private payrolls rose by 242,000 last month, a figure better than expected. But U.S. initial jobless claims for last week, which came out Thursday, showed the largest rise in five months, even as the labor market remained tight.
A tight jobs market would indicate that it’s strong enough to handle larger interest-rate increases, economists have said.
The Fed raised rates by 25 basis points Feb. 1 following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November to try to rein in skyrocketing inflation. The Fed’s favorite inflation measure, the U.S. personal consumption expenditures price index, unexpectedly accelerated in January.
Silver May futures increased 1.4 cent Thursday to settle at $20.17 an ounce on Comex, though the front-month contract fell 5.1% in the first four days of the week. Silver retreated 12% last month after falling 0.8% in January and rising 10% in December. It advanced 3% in 2022. The May contract is currently up $0.530 (+2.63%) an ounce to $20.695 and the DG spot price is $20.58.
Spot palladium gained 1.7% Thursday to $1,423.00 an ounce and is down 3.4% this week. Palladium plummeted 14% in February after dropping 7.4% in January and retreating 4% in December. It lost 5.7% in 2022. Currently, the DG spot price is down $1.70 an ounce to $1407.50.
Spot platinum advanced 0.8% Thursday to $953.80 an ounce and is down 3% in the first four days of the week. Platinum retreated 5.9% in February after falling 4.3% in January and gaining 3.4% in December. It surged 10% in 2022. The DG spot price is slightly up currently by $1.00 an ounce to $957.70.
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