Gold modestly rebounds on Jobs report this morning that shows lackluster growth. The bounce back follows biggest one-day drop in dollar terms in almost three years on Thursday.
The Labor Department’s just-released U.S. employment data for August showed the “non-farm” payrolls rose 130,000, which significantly misses the market forecast of 150,000. This could indicate a cooling economy which is music to the ears of monetary policy doves, who are looking for a rate cut when the FOMC meets in less than two weeks.
The most-active December gold contract had tumbled 2.2% to $1,525.50 an ounce on Thursday, its lowest settlement in two weeks. But after this morning’s news, finds the December contract up at $1,535.20.
Yesterday, news that the U.S. and China had agreed to work toward a fresh round of trade talks next month and stronger-than-expected U.S. economic data had caused the yellow metal to lose some of its luster as a hedge against uncertainty. Equities rallied, with the Standard & Poor’s 500 Index increasing 1.3% Thursday, and the Dow Jones Industrial Average gaining 1.4%.
Investors are awaiting further signals on the state of the economy and hints about monetary policy Friday from a scheduled speech by Federal Reserve Chairman Jerome Powell and the release of a key economic indicator – the monthly U.S. jobs report for August.
Precious metals climbed in August amid uncertainty over the U.S.-China trade war, fears of an economic recession, speculation of upcoming interest-rate cuts and negative bond yields.
The CME FedWatch Tool put the probability of a Fed interest-rate cut on Sept. 18 at 92.3% late yesterdday, but after this morning’s jobs report, the chance of a cut rose a tad to 94.6%.
Harry Tchilinguirian, head of commodity research at BNP Paribas SA, said in a note earlier this week that the yellow metal is likely to surge above $1,600 an ounce as the Fed cuts rates four times between this month and June 2020 and investors seek safe-haven assets, Bloomberg reported.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.69% to 889.75 metric tons Thursday from Wednesday, Reuters reported. Meanwhile, the retail price of physical gold in Japan climbed to its highest level in almost four decades on Thursday in a surge spurred by fluctuations in the value of the yen along with the quest a hedge against uncertainty, Reuters also reported.
Silver’s drop Thursday outpaced gold’s, with the December contract plummeting 3.8% to $18.81 an ounce on Comex. Silver is up 2.5% so far this week. Spot platinum and spot palladium were both lower early Friday. Platinum tumbled 2.8% Thursday, while palladium gained 0.3%.
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