Gold retreats after reaching new record

Gold retreats after reaching new record

Gold retreats after reaching a new record high, as investors took profits after the precious metal rose above $2,300 an ounce on Thursday. The bullion slipped further on this morning’s positive job numbers.

Surprisingly strong job growth announced this morning by the Labor Dept. Nonfarm payrolls jumped 303,000 in March, far beyond the forecast of a 200,000 increase, while the unemployment rate held steady at 3.8%, as expected. In the key average hourly earnings measure, wages rose 0.3% for the month and 4.1% from a year ago, both in line with Wall Street estimates.

Front-month gold futures fell 0.3% Thursday to settle at $2,308.50 an ounce on Comex, though the most-active June contract gained 3.1% in the first four days of the week. Bullion increased 8.9% in March – the biggest monthly rise in more than three years – after dropping 0.6% in February and declining 0.2% in January. The metal rose 13% in 2023. The June contract is currently up $1.00 (+0.04%) an ounce to $2309.50 and the DG spot price is $2286.80.

Minneapolis Fed President Neel Kashkari on Thursday floated the possibility that the Fed wouldn’t cut interest rates at all this year because of persistent inflation, though he had previously projected two rate reductions this year. But Cleveland Fed President Loretta Mester said in separate remarks that the central bank may be approaching the level of confidence it would require to begin cutting rates. 

Friday’s jobs report will likely be a key indicator, as the Fed has said it closely watches both labor market conditions and inflation when determining monetary policy. High rates are considered bearish for gold, while a cut would be considered bullish. Watch for reactions to comments this morning from Richmond Fed President Tom Barkin, Dallas Fed President Lorie Logan and Fed Governor Michelle Bowman.

The Fed’s favorite inflation measure, the personal consumption expenditure price index, came out last week in line with expectations for February. 

About 94.2% of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep rates unchanged in May, while 5.8% expect a 25 basis point cut. The central bank has raised interest rates by 5.25 percentage points since March 2022 in an effort to cut inflation, but kept rates unchanged at 5.25% to 5.50% at its meeting last month. Most investors are expecting a rate cut in June.

The wars in Gaza and Ukraine are making some traders skittish, boosting haven demand for gold.

Front-month silver futures rose 0.7% Thursday to settle at $27.25 an ounce on Comex, and the May contract advanced 9.4% in the first four days of the week. Silver gained 8.9% in March after losing 1.2% in February and falling 3.8% in January. It ticked up 0.2% in 2023. The May contract is currently down $0.557 (-2.04%) an ounce to $26.690 and the DG spot price is $26.68.

Spot palladium increased 1.6% Thursday to $1,047.50 an ounce and is up 2% so far this week. Palladium advanced 7.7% last month after falling 4.6% in February and tumbling 11% in January. Palladium plummeted 38% last year. Currently, the DG spot price is down $36.30 an ounce to $1010.00.

Spot platinum gained 0.7% Thursday to $947.10 an ounce and is up 3.6% in the first four days of the week. Platinum rose 3.3% last month after decreasing 4.9% in February and falling 8% in January. Platinum dropped 6.8% in 2023. The DG spot price is currently down $19.40 an ounce to $927.20.

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