Gold loses ground on jobs data

Gold loses ground on jobs data

Gold loses ground on jobs data, heading for its first weekly drop in four weeks. The spot price of the yellow metal lost a tad over $10 an ounce in response to the surprisingly positive employment numbers. Gold also came under pressure as the dollar strengthened.

Job creation continued in November with payrolls growing even faster than expected. Nonfarm payrolls rose by 199,000 for the month, slightly better than the 190,000 Dow Jones estimate, the Labor Department reported Friday. The unemployment rate declined to 3.7%, compared to the forecast for 3.9%. The unexpected positive data doesn’t support speculation that the Federal Reserve is approaching the end of its series of interest rate hikes. The central bank has boosted rates by 5.25 percentage points since March 2022 to curb inflation to the 2% level. Monthly consumer sentiment data is also due out Friday. 

Front-month gold futures lost $1.50 Thursday to settle at $2,046.40 an ounce on Comex, and the February contract is down 2.1% so far this week. Bullion rose 3.2% last month after gaining 6.9% in October and falling 5.1% in September. The metal is up 12% in 2023. The February contract is currently down $12.9 (-0.63%) an ounce to $2033.50 and the DG spot price is $2011.40.

Adding to speculation of a weak jobs report from the Labor Department, private payrolls missed expectations for November in the ADP Employment Report, released Wednesday. The 103,000 increase was below the 128,000 forecast by economists. The October estimate was also revised down to 106,000 in October.

U.S. weekly initial jobless claims gained 220,000 last week, according to data from the Labor Department Thursday. That’s slightly better than the market expectation of 22,000. 

The Fed kept interest rates unchanged at 5.25% to 5.50% in November. The CME FedWatch Tool shows that 98.4% of the investors it tracks are betting that the Fed will keep its federal funds rate unchanged Dec. 13, while 1.6% are expecting a 25 basis point increase. The central bank is widely expected to keep rates unchanged in January, too, but more than half of the investors tracked by the tool are betting on a rate cut in March.

The Fed closely watches labor market and inflation data when determining monetary policy. The personal consumption expenditures price index report for October came in in line with expectations last week. The measure is known as the Fed’s favorite inflation report. Higher interest rates are considered bearish for gold, making it a less attractive investment. 

Front-month silver futures decreased 0.7% Thursday to settle at $24.06 an ounce on Comex, and the March contract is down 7% so far this week. Silver advanced 12% in November after increasing 2.2% in October and decreasing 9.5% in September. It’s up 1.9 cents in 2023. The March contract is currently down $0.199 (-0.83%) an ounce to $23.869 and the DG spot price is $23.39

Spot palladium rose 3.3% Thursday to $994.00 an ounce and has dropped 2.1% so far this week. Palladium lost 9.5% last month after dropping 10% in October and rising 3% in September. Palladium has plummeted 45% so far this year. Currently, the DG spot price is down $6.20 an ounce to $989.50.

Spot platinum gained 2.5% Thursday to $919.70 an ounce, and it’s down 1.8% in the first four days of the week. Platinum fell 0.7% in November after gaining 3.5% in October and declining 6.6% in September. Platinum is down 14% in 2023. The DG spot price is currently up $6.10 an ounce to $920.40.

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