Gold modestly Up On Jobs Data

Gold Modestly Up On Jobs Data

Gold modestly up on jobs data and slightly weaker dollar though it failed to leap the $1,800 an ounce line. It seems headed for its biggest one-week drop since November as the yellow metal came under pressure from strong Treasury yields amid expectations of upcoming interest rate hikes.

U.S. Nonfarm payrolls seriously missed the market’s forecast, rising by 199,000 in December according to the Labor Dept. The street had looked for a jump of 422,000 jobs. However, unemployment dropped 3.9%, beating the 4.1% estimate and wages grew more than expected, rising 4.7% year over year.

February gold futures tumbled 2% Thursday to settle at $1,789.20 an ounce on Comex, the lowest close for a front-month contract since Dec. 21. Futures dropped 2.2% in the first four days of the week. Gold advanced 2.9% in December — its best month since May — and climbed 4.1% in the fourth quarter. But it dropped 3.5% in 2021. The February contract is currently up $2.40 (+0.13%) an ounce to $1,791.60 and the DG spot price is $1,791.60.

Treasury yields hovered near their highest level since March amid anticipation that the Federal Reserve would raise interest rates as soon as March. High Treasury yields raise the opportunity cost of holding bullion and pressure the precious metal. An interest rate hike would also be bearish for gold, which would become a less attractive investment.

The CME FedWatch Tool showed that more than 75% of traders anticipate a rate increase at the March meeting of the Federal Open Market Committee. The Fed committee also meets at the end of January, but few traders anticipate a rate hike then.

Investors will be closely watching economic reports for further indications on when the Fed might act and how soaring inflation is affecting the economy. U.S. inflation climbed at the fastest pace since 1982 in November.

U.S. weekly initial jobless claims rose 207,000 last week, according to a Labor Department report Thursday, more than investors had expected, meaning that applications for unemployment benefits increased. But the private payroll firm ADP reported job growth in December that was twice as high as expectations in a report Wednesday.

Investors also continued to pay attention to soaring cases of the omicron variant of the coronavirus for any indications that that it may derail the economic recovery. The spread of the variant is keeping a floor under gold prices, since the yellow metal serves as a hedge against uncertainty.

March silver futures decreased 4.2% Thursday to settle at $22.19 an ounce on Comex. The front-month contract tumbled 5% in the first four days of the week. Silver gained 2.4% in December and 5.9% in the fourth quarter, though it dropped 12% in 2021. Silver prices are tied to industrial demand. The March contract is up $0.015 (+0.07%) an ounce to $22.205 and the DG spot price is $22.26.

Spot palladium fell 1.4% Thursday to $1,886.00 an ounce and is down 1.5% so far this week. Palladium rallied 9.6% in December, but it fell 0.4% in the fourth quarter and 22% in 2021. A global shortage of semiconductor chips means auto production is down, which has pressured demand for the metal. Palladium’s main use is in catalytic converters for gasoline-powered vehicles. Currently, the DG spot price is up $35.50 an ounce to $1,924.50.

Spot platinum retreated 3.6% Thursday to $968.60 an ounce, and it’s down 0.5% in the first four days of this week. The metal gained 2.9% in December and 0.2% in the fourth quarter. It lost 9.4% last year. The DG spot price is currently down $3.70 and ounce to $966.50.


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