Gold drops on very positive Jobs data and unemployment numbers, lifting treasury yields. The yellow metal was already feeling pressure from comments made by a Federal Reserve official indicating that the central bank may taper its easy monetary policy sooner rather than later.
July saw hiring grow at the fastest pace in nearly a year with nonfarm payrolls increasing by 943,000 jobs according to the U.S. Labor Department, outpacing the 845,000 Dow Jones estimate. This jump comes despite delta variant concerns and the reported struggle companies are experiencing in a tight labor market. The unemployment rate dropped to 5.4%, according to the department’s Bureau of Labor Statistics. The payroll increase was the best since August 2020.
Fed Vice Chair Richard Clarida said the taper could begin as soon as the end of this year. His comments made gold less attractive as an alternate investment and a hedge against uncertainty. Easy monetary policy is considered bullish for gold because the metal is a traditional hedge against the inflation that may follow.
The U.S. July jobs report is likely to give investors indications on the state of the labor market as the delta variant surged. The report is a key barometer of the state of the economy. The Labor Department said Thursday that U.S. initial jobless claims fell to near a pandemic low last week.
December gold futures fell 0.3% Thursday to settle at $1,808.90 an ounce on Comex. The front-month contract dropped 0.5% in the first four days of the week. The precious metal increased 2.6% in July and advanced for the third time in four months. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic and is down 4.6% so far in 2021. The December contract is currently down $35.80 (-1.98%) to $1773.10 and the DG spot price is $1,772.90.
The economic statistics and the state of the pandemic are likely to influence investors’ forecasts on when central banks around the world are likely to begin tapering their stimulus efforts.
Earlier this week, the Institute for Supply Management reported that U.S. manufacturing growth cooled last month and the ADP employment report showed only 330,000 jobs were added in July, a figure that badly missed expectations for 653,000 new jobs.
The Bank of England kept interest rates unchanged on Thursday and warned of a prolonged period of inflation. Gold is a traditional hedge against inflation, so rising inflation would be bullish for the yellow metal.
September silver futures fell 0.7% Thursday to settle at $25.29 an ounce on Comex. The front-month contract is down 1% in the first four days of the week after dropping 2.5% in July. The metal rose 47% in 2020 and is down 4.2% so far this year. Silver prices are tied to industrial demand, which could taper if lockdowns are reinstated and dampen manufacturing. The September contract is down $0.777 (-3.07%) an ounce to $24.515 and the DG spot price is $24.45.
Spot palladium rose 0.2% Thursday to $2,668.00 an ounce and is down 0.2% so far this week. It fell 4.3% in July and is up 8.9% so far in 2021. The current DG spot price is down $0.10 an ounce to $2667.00.
Spot platinum lost 1.1% Thursday to $1,019.50 an ounce and retreated 3.6% in the first four days of the week. The autocatalyst decreased 2.1% in July and is down 5% in 2021. The DG spot price is down $17.30 an ounce to $1001.40.
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