Gold retreats as dollar gains

Gold retreats as dollar gains

Gold retreats early Monday as the dollar gains after a strong U.S. jobs report on Friday.

U.S. nonfarm payrolls rose a more-than-expected 339,000 in May, well above the 190,000 forecast by economists. The strong labor market eroded speculation that the Federal Reserve will pause or skip an interest rate hike at its policy meeting next week. Another rate hike would be bearish for gold, which tumbled Friday. The precious metal loses attractiveness as an alternate investment when interest rates and the dollar rise. 

August gold futures rose 0.3% last week to settle at $1,969.60 an ounce on Comex, though the front-month contract fell 1.3% Friday. Bullion retreated 0.9% in May after increasing 0.6% in April and 8.1% in March. The metal fell $2.40 in 2022. The August contract is currently down $7.0 (-0.36%) an ounce to $1962.1 and the DG spot price is $1946.90.

While nonfarm payrolls rose last month, the unemployment rate crept up to 3.7% in May, above the estimate of 3.5%. That put the jobless rate at the highest level since October 2022, though still near the lowest since 1969. But it tempered some of the speculation about a pause in interest rates. 

Fed policymakers have indicated that they closely follow both inflation and labor market data when determining monetary policy. U.S. inflation measured by the personal consumption expenditures price index, the Fed’s favorite inflation measure, bounced higher in April, data released last week showed. 

About 75.9% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep interest rates unchanged at the next meeting June 14, while 24.1% expect the central bank to raise rates by another 25 basis points. A week ago, most investors were expecting rates to go up.

The Fed raised rates by another 25 basis points last month. The Fed has raised rates by 25 basis points three times this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022. The federal funds rate is currently at 5.00% to 5.25%. 

In economic news this week, U.S. factory orders and the ISM services report come out Monday, followed by wholesale inventories and inital jobless claims Thursday. 

July silver futures rallied 1.7% last week to settle at $23.75 an ounce on Comex, though the front-month contract slid 1% Friday. Silver decreased 6.5% in May after gaining 4.4% in April and 15% in March. It rose 3% in 2022. The July contract is currently down $0.237 (-1.00%) to $23.510.

Spot palladium decreased 1.9% last week to $1,424.00 an ounce, though it gained 0.9% Friday. Palladium fell 9.3% last month after rising 2% in April and 3.7% in March. Palladium lost 5.7% in 2022. Currently, the DG spot price is up $2.50 an ounce to $1426.00

Spot platinum retreated 2.3% last week to $1,008.20 an ounce after dropping 0.6% Friday. Platinum retreated 7.4% in May after adding 8.5% in April and 3.7% in March. Platinum surged 10% in 2022. The DG spot price is currently up $24.60 to $`030.80.

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