Gold retreats from brief Morning peak

Gold retreats from brief Morning peak

Gold retreats from a brief Morning peak that was powered by jobs data. The DG spot rose to $1830 on the news, then fell back $10 an ounce. Investors now await the release of the monthly U.S. jobs report for September on Friday for further direction. Palladium traded at a five-year low.

Private payroll growth tailed off sharply in September, according to this morning’s ADP report. The payroll processing firm reports that job growth totaled just 89,000 for the month, down from an upwardly revised 180,000 in August and below the 160,000 estimate from economists polled by Dow Jones.

The yellow metal remained under pressure amid expectations that the Federal Reserve will keep interest rates hike and possibly increase them again after a recent series of economic reports. The next jobs report will be closely watched because the Fed especially tracks labor market conditions and inflation when setting monetary policy. 

While the U.S. jobs report Friday will be the most closely watched, the weekly initial jobless claims for last week will also provide insights on Thursday. 

Front-month gold futures dropped 0.3% Tuesday to settle at $1,841.50 an ounce on Comex, and the December contract declined 1.3% in the first two days of the week. Bullion fell 5.1% in September after dropping 2.2% in August and rising 4.1% in July. The metal is up 0.8% in 2023. The December contract is currently down $5.60 (-0.30%) an ounce to $1835.90 and the DG spot price is $1820.60.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2% Tuesday, Reuters reported. 

U.S. job openings unexpectedly increased in August, according to data released Tuesday by the Bureau of Labor Statistics. The sign of resilience in the labor market heightened speculation that the Fed has room for a further interest rate increase without damaging the economy. 

Treasury Secretary Janet Yellen – a former Fed chief – said Tuesday that she’s “very optimistic” about the U.S. economy, which has proven surprisingly resilient. But she said it remains to be seen how long rates will remain high. 

The Fed has raised rates by 5.25 percentage points since March 2022 to curb inflation. The central bank held its benchmark interest rate at 5.25% to 5.50% in September. About 78.1% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in November. Just 21.9% expect it to raise rates another 25 basis points. There is also a meeting scheduled for December at which most investors also predict the Fed will hold, though also by a smaller margin. 

Gold may also get some support from uncertainty in the U.S. political sphere after Kevin McCarthy was ousted Tuesday as U.S. House speaker in an unprecedented vote which left Congress without leadership. 

Front-month silver futures lost 0.2% Tuesday to settle at $21.38 an ounce on Comex, and the December contract retreated 4.8% in the first two days of the week. Silver decreased 9.5% last month after slipping 0.6% in August and gaining 8.5% in July. It’s down 11% in 2023. The December contract is currently down $0.332 (-1.55%) an ounce to $21.045 and the DG spot price is $20.98.

Spot palladium slipped 1.2% Tuesday to $1,204.00 an ounce and has lost 4.9% this week. Palladium rose 3% last month after sliding 5.3% in August and rising 3.6% in July. Palladium has plummeted 33% so far this year. The current DG spot price is down $21.90 an ounce to $1188.00.

Spot platinum dropped 0.9% Tuesday to $879.80 an ounce and has fallen 3.4% this week. Platinum declined 6.6% last month after advancing 1.7% in August and gaining 5.2% in July. Platinum is down 18% in 2023. Currently, the DG spot price is down $9.50 an ounce to $872.30.

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