Gold drops on surprising jobs report. After drifting higher in early trading, the yellow metal dropped on fears that the Fed would increase its hawkish moves on interest rates. The DG spot price fell $10 an ounce, but quickly rebounded as Bulls stepped in to buy the dip.
Nonfarm payrolls increased by 336,000 for the month, soundly beating the Dow Jones consensus forecast of 170,000 and more than 100,000 higher than the August, per the Labor Department. The unemployment rate was 3.8%, compared to the forecast for 3.7%.
The Fed has raised rates by 5.25 percentage points since March 2022 to curb inflation, and policymakers are concerned that the moves may hurt the labor market or trigger a recession. Resilience in the labor market would boost speculation that the Fed has room for more increases. Rate hikes are bearish for gold, making the yellow metal less attractive as an alternate investment.
Front-month gold futures dropped 0.2% Thursday to settle at $1,831.80 an ounce on Comex, and the December contract declined 1.8% in the first four days of the week. Bullion fell 5.1% in September after dropping 2.2% in August and rising 4.1% in July. The metal is up 0.3% in 2023. The December contract is currently up $2.4 (+0.13%) an ounce to $1834.20 and the DG spot price is $1829.10.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2% Thursday to 867.58 metric tons, the lowest level since August 2019, Reuters reported.
U.S. private payrolls rose much less than expected in September, a separate report from ADP showed Wednesday. Jobs grew by just 89,000 last month, well below the 160,000 estimate from economists. The figure was also below an upwardly revised 180,000 in August. And weekly initial jobless claims for last week increased slightly to 207,000, according to a report Thursday from the Labor Department.
Fed policymakers have said they closely watch data on the labor market and inflation when setting monetary policy.
The central bank held its benchmark interest rate at 5.25% to 5.50% in September. About 68.7% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in November. Just 31.3% expect it to raise rates another 25 basis points. There is also a meeting scheduled for December at which most investors also predict the Fed will hold, though also by a smaller margin.
Front-month silver futures lost 0.6% Thursday to settle at $21.02 an ounce on Comex, and the December contract retreated 6.4% in the first four days of the week. Silver decreased 9.5% last month after slipping 0.6% in August and gaining 8.5% in July. It’s down 13% in 2023. The December contract is currently up $0.606 (+2.88%) an ounce to $21.625 and the DG spot price is $21.13
Spot palladium slipped 1.9% Thursday to $1,164.50 an ounce and has lost 8% this week. Palladium rose 3% last month after sliding 5.3% in August and rising 3.6% in July. Palladium has plummeted 36% so far this year. Currently, the DG spot price is up $0.60 an ounce to $1162.50.
Spot platinum dropped 1.2% Thursday to $865.20 an ounce and has fallen 5% this week. Platinum declined 6.6% last month after advancing 1.7% in August and gaining 5.2% in July. Platinum is down 19% in 2023. The DG spot price is currently up $3.50 an ounce to $868.00
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.