Gold climbs on jobs report

Gold climbs on jobs report

Gold climbs on jobs report showing jobs growth, but a slight cooling in wages. The yellow metal had ticked higher early Friday despite a stronger dollar and is poised for its third consecutive weekly gain.

Payrolls grew 223,000 jobs in December. That’s a slower pace than November’s 256,000 gain, but still beating the Dow Jones estimate of 200,000. The unemployment rate dropped to 3.5%, 0.2 percentage points below expectations. The morning’s most interesting number for inflation watchers is wage growth which was less than expected. Average hourly earnings rose 0.3% for the month, missing the estimated 0.4% increase.

The ADP employment report showed the private sector added 235,000 jobs last month, according to a report out Thursday, beating estimates. Meanwhile, U.S. weekly initial jobless claims for the last week of December fell by 19,000 from the week before’s revised level to 204,000, according to the Labor Department. It was the lowest level since September

Front-month gold futures fell 1% Thursday to settle at $1,840.60 an ounce on Comex. The February contract advanced 0.8% so far this week. U.S. financial markets were closed Monday in observance of New Year’s Day, which fell on a Sunday this year. Bullion gained 3.8% in December after increasing 7.3% in November. It was the first two-month rally since March. The metal fell $2.40 in 2022. The February contract is currently up $7.60 (+0.41%) an ounce to $1848.20 and the DG spot price is $1860.60.

Minutes of the last meeting of Fed policymakers in December, which were released Wednesday, showed that officials expect higher rates for “some time.” 

The Fed raised rates by 50 basis points in December to 4.25% to 4.5%, the highest level in 15 years. High interest rates are typically bearish for gold. The central bank has indicated that it will maintain its aggressive monetary policy into 2023 despite some investors’ fears of a recession. 

The Fed raised rates by 75 basis points each in June, July, September, and November. Investors tracked by the CME FedWatch Tool are betting there’s a 66.6% chance the Fed will boost interest rates by just 25 basis points at policymakers’ next meeting on Feb. 1. The odds are 33.4% in favor of another 50 basis point hike. But expectations about a smaller hike are shifting. A week ago, 72.8% of investors anticipated a 25 basis point increase, with 27.2% at 50 basis points. 

Front-month silver futures fell 2.3% Thursday to settle at $23.42 an ounce on Comex. The March contract dropped 2.6% this week. Silver rose 10% in December after increasing 14% in November, its biggest monthly gain since December 2020. It advanced 3% in 2022. The March contract rose $0.291 (+1.24%) an ounce to $23.715 and the DG spot price is $23.78

Spot palladium retreated 2.5% Thursday to $1,766.50 an ounce and is down 2.2% so far this week. Palladium tumbled 4% in December after gaining 0.3% in November. It lost 5.7% in 2022. Currently, the DG spot price is up $42.80 an ounce to $1799.50.

Spot platinum dropped 1.4% Thursday to $1,067.70 an ounce and has lost 0.2% this week. Platinum increased 3.4% last month after rising 11% in November, its best month since February 2021. It surged 10% in 2022. The DG spot price is currently up $16.30 an ounce to $1081.60.

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