Gold gains ground on U.S. jobs report

Gold gains ground on U.S. jobs report

Gold gains ground on this morning’s U.S. jobs report that gives hopes for a slowing of the Fed’s rate hike plan. The yellow metal still appears headed for a weekly decline.

June saw an easing in employment growth, taking a bit shine off the country’s strong labor market. Nonfarm payrolls rose 209,000 last month per this morning’s Labor Department report. That misses the Dow Jones estimates of 240,000. While the number is still solid, its a steep drop from May’s downwardly revised total of 306,000 and was the slowest month for jobs since December 2020. Those numbers fuel the hopes that the Fed will not be moved to raise interest rates again in the near future, good news for gold.

Yesterday’s employment data was a decided contrast. The private sector added 497,000 jobs in June, almost double the amount that economists had expected, according to the ADP employment report released Thursday. Treasury yields spiked on the data. The relatively resilient labor market is likely to bolster expectations that the Fed will boost interest rates again later this month. Fed policymakers have said they closely track reports on the labor market and inflation.

August gold futures fell 0.6% Thursday to settle at $1,915.40 an ounce on Comex. The front-month contract is down 0.7% this week. Overall trading volumes are light this week because U.S. financial markets were closed Tuesday for the Independence Day holiday. Bullion dropped 2.7% last month after retreating 0.9% in May and increasing 0.6% in April. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022. The August contract is currently up $9.80 (+0.51%) an ounce to $1925.20 and the DG spot price is $11.10.

The monthly jobs report from the Labor Department is the latest piece of key data that the Fed will have in hand before the late-July policy meeting. The Fed’s favorite inflation measure, the personal consumption expenditure price index, released last Friday, showed that U.S. inflation cooled in May. 

U.S. weekly initial jobless claims ticked up moderately last week, data from the Labor Department also showed Thursday. 

The minutes of the Fed’s June policy meeting showed that almost all of the central bank’s policymakers expect rates to go higher again this year. The minutes, released Wednesday, showed some disagreement over last month’s decision to hold rates unchanged for the first time after 10 consecutive increases to combat inflation. The Fed left its benchmark federal funds rate at 5.00% to 5.25% last month.

About 94.9% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise interest rates by 25 basis points at its July monetary policy meeting, while 5.1% expect it to keep rates unchanged. The Fed has increased rates by 25 basis points three times this year following hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022 and smaller increases in March and May of last year. The rate hikes have totaled 5 percentage points since March 2022.

September silver futures dropped 2.2% Thursday to $22.89 an ounce on Comex. The most-active contract decreased 0.6% so far this week. Silver dropped 2.4% in June after decreasing 6.5% in May and gaining 4.4% in April. It retreated 4.2% in the first half of the year after rising 3% in 2022. The September contract is currently up $0.090 (+0.39%) an ounce to $22.980 and the DG spot price is $22.82.

Spot palladium slid 1.5% Thursday to $1,265.50 an ounce. It increased 1.1% so far this week. Palladium fell 9.5% in June after tumbling 9.3% in May and rising 2% in April. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022.The current DG spot price is down $9.40 an ounce to $1255.00.

Spot platinum fell 1.7% Thursday to $911.00 an ounce. It dipped 30 cents so far this week. Platinum fell 9.3% in June after retreating 7.4% in May and adding 8.5% in April. Platinum dropped 15% in the first half of the year after surging 10% in 2022. The DG spot price is currently up $2.30 an ounce to $914.00.

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