Gold hits new record above $3580 an ounce on this morning’s jobs report, headed for its third weekly advance as Friday’s key U.S. monthly jobs report data reinforces expectations that the Federal Reserve will cut interest rates later this month.
Nonfarm payrolls increased by just 22,000 for August, lower than the 75,000 forecast, while the unemployment rate rose to 4.3% according to the Bureau of Labor Statistics. The report showed a marked slowdown from the July increase of 79,000, which was revised up by 6,000. Revisions also showed a net loss of 13,000 in June. The August jobs report is one of the central bank’s most closely watched economic indicators, along with inflation. Today’s data shows that the labor market extended its weakness to the longest stretch since the pandemic. Gold is a traditional hedge against economic uncertainty. It also tends to rally when the Fed reduces interest rates, becoming a more attractive alternate investment.
December gold futures fell 0.8% Thursday to settle at $3,606.70 an ounce on Comex, and the yellow metal is up 2.6% so far this week. U.S. financial markets were closed Monday for the Labor Day holiday. Bullion added 5% in August after gaining 1.2% in July and slipping 0.2% in June. It’s up 37% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $27.70 (+0.77%) an ounce to $3634.40 and the DG spot price is $3593.80.
Ahead of the U.S. nonfarm payrolls report, ADP data showed Thursday that private-sector employment growth slowed last month. The report released Thursday showed an increase of 54,000 jobs in August, well below the 75,000 forecast by economists and the 104,000 the report showed for July.
In addition to the economic picture, gold has rallied on concerns about the Fed’s independence in setting monetary policy. U.S. President Donald Trump attempted to fire Fed Governor Lisa Cook for alleged mortgage fraud last week and she has sued to retain her job.
Separately, Stephen Miran, whom Trump nominated last month to fill the unfinished term of Fed Governor Adriana Kugler, said this week at his confirmation hearing that he doesn’t plant to leave his current position as chair of the White House Council of Economic Advisers if confirmed. That would give the White House a direct line to the traditionally independent central bank. Trump and his administration have long called for expedited rate cuts.
Over 83% of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates by 25 points this month, while 16% say the rate cut will be 50 points. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. The Fed kept interest rates unchanged in July at 4.25% to 4.50%, a rate that it’s held all year.
The Fed’s favorite inflation measure, the personal consumption expenditures price index, came out last week with July data. The measure showed that core inflation rose to 2.9% in July, the highest level since February. The Fed’s inflation target is 2%.
Front-month silver futures lost 1.5% Thursday to settle at $41.42 an ounce on Comex, though the metal is up 1.7% so far this week. Silver rallied 11% last month after rising 1.5% in July and increasing 9.5% in June. It rose 21% in 2024. The December contract is currently up $0.418 (+1.01%) an ounce to $41.835 and the DG spot price is $41.46.
Spot palladium decreased 2.9% Thursday to $1,131.50 an ounce but is up 1.8% so far this week. Palladium decreased 7.8% in August after climbing 8.8% in July and surging 14% in June. Palladium dropped 17% last year. The DG spot price is currently up $5.70 an ounce to $1141.50.
Spot platinum retreated 4.4% Thursday to $1,376.30 an ounce, though it’s up 0.5% this week. It rose 5.9% last month after dropping 3.9% in July and climbing 27% in June. Platinum lost 8.4% in 2024. The current DG spot price is up $27.20 an ounce to $1398.80.
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