Gold slumps on positive jobs data but still holding weekly gain. DG spot gold fell $23 an ounce on the key U.S. monthly jobs report for January.
U.S. job growth had a strong January, casting doubt on the Fed slowing their interest rate schedule. The Commerce Department reported 353,000 new Nonfarm payroll jobs for the month, solidly beating the Dow Jones estimate of 185,000. The unemployment rate held at 3.7%, slightly less than the 3.8% estimate, while average hourly earnings increased 0.6%, double the monthly estimate and year-over-year wages jumped 4.5%, well above the 4.1% forecast.
The Fed kept interest rates unchanged at 5.25% to 5.50% on Wednesday, amid improving consumer confidence and declines in the inflation rate, and Fed Chair Jerome Powell signaled that widely anticipated rate cuts might not come until later this year. Rate hikes are typically considered bearish for gold, so cuts would be supportive for the precious metal.
Front-month gold futures rose 0.2% Thursday to settle at $2,071.10 an ounce on Comex, and the most-active April contract is up 1.7% in the first four days of this week. Bullion slipped 0.2% in January after gaining 0.7% in December and rising 3.2% in November. The metal rose 13% in 2023. The April contract is currently down $21.5 (-1.04%) an ounce to $2049.60 and the DG spot price is $2033.10.
The Fed has raised interest rates by 5.25 percentage points since March 2022 to curb inflation. The central bank has said it closely tracks labor market conditions as well as inflation when determining monetary policy, making Friday’s monthly jobs report a key piece of economic data.
Powell said Wednesday that the labor market remains strong: “It’s still a good labor market for wages and for finding a job, but it’s getting back into balance, and that’s what we want to see,” he said after the policy meeting.
The Fed’s favorite inflation measure, the personal consumption expenditures price index, came out a week ago and showed that so-called core PCE, which excludes volatile food and energy prices, fell below 3% in December for the first time since March 2021, before the Fed started raising rates.
About 80.5% of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep rates steady at policymakers’ next meeting in March, while 19.5% expect a 25 basis point cut. A month ago, 73.4% of investors were anticipating a cut in March.
Front-month silver futures rose 0.3% Thursday to $23.24 an ounce on Comex, and the March contract has rallied 1.6% so far this week. Silver fell 3.8% in January after dropping 6.1% in December and advancing 12% in November. It ticked up 0.2% in 2023. The March contract is currently down $0.576 (-2.48%) an ounce to $22.660 and the DG spot price is $22.58.
Spot palladium fell 1.6% Thursday to $984.00 an ounce, though it has rallied 0.9% this week. Palladium tumbled 11% last month after advancing 8.6% in December and losing 9.5% in November. Palladium plummeted 38% last year. Currently, the DG spot price is down $30.10 an ounce to $949.50.
Spot platinum dropped 1% Thursday to $922.10 an ounce, and it’s down 0.3% so far this week. Platinum fell 8% last month after rising 8.1% in December and falling 0.7% in November. Platinum dropped 6.8% in 2023. The DG spot price is currently down $19.20 an ounce to $902.20.
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