Gold rises as investors await jobs report

Gold rises as investors await jobs report

Gold rises as investors await Friday’s jobs report. It edged higher early Wednesday as the dollar weakened on this morning’s ADP jobs number.

Weaker jobs data is likely to reinforce widespread speculation that the Federal Reserve is approaching the end of its series of interest rate hikes. The Fed has boosted rates by 5.25 percentage points since March 2022 to curb inflation to the 2% level. 

The ADP Employment Report released this morning shows slowing employment and wage growth. The private sector job creation in November slowed, adding just 103,000 workers, slightly below the Dow Jones estimate of 128,000, per the payrolls processing firm ADP. Along with the modest job growth came a 5.6% increase in annual pay, which ADP said was the smallest gain since September 2021.

Front-month gold futures lost 0.3% Tuesday to settle at $2,036.30 an ounce on Comex, and the February contract is down 2.6% so far this week. Bullion rose 3.2% last month after gaining 6.9% in October and falling 5.1% in September. The metal is up 12% in 2023. The February contract is currently up $10.3 (+0.51%) an ounce to $2046.60 and the DG spot price is $2034.10.

Gold futures have slipped so far this week after rallying to a new record above $2,100 an ounce in intraday trading Monday. Haven demand linked to the war between Israel and Hamas and Fed speculation has kept gold prices robust. Gold is a traditional hedge against geopolitical and economic uncertainty, and high interest rates are bearish for the yellow metal.  

The Fed kept interest rates unchanged at 5.25% to 5.50% in November. The CME FedWatch Tool shows that 97.7% of the investors it tracks are betting that the Fed will keep its federal funds rate unchanged Dec. 13, while 2.3% are expecting a 25 basis point increase. The central bank is widely expected to keep rates unchanged in January, too, but more than half of the investors tracked by the tool are betting on a rate cut in March.

U.S. job openings fell to the lowest level in more than two and a half years in October, according to data Tuesday from the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report. The figures reinforce the idea that higher interest rates are reducing demand for workers. 

The report came on the heels of the personal consumption expenditures price index report for October, which came in in line with expectations last week. The measure is known as the Fed’s favorite inflation report. In addition to the ADP and U.S. nonfarm payrolls reports on Wednesday and Friday, the weekly initial jobless claims report from the Labor Department will come out Thursday. 

Front-month silver futures decreased 1.5% Tuesday to settle at $24.55 an ounce on Comex, and the March contract is down 5.1% so far this week. Silver advanced 12% in November after increasing 2.2% in October and decreasing 9.5% in September. It’s up 2.1% in 2023. The March contract is currently down 0.026 (-0.11%) an ounce to $24.520 and the DG spot price is $24.23.

Spot palladium fell 3.5% Tuesday to $955.00 an ounce and has dropped 6% so far this week. Palladium lost 9.5% last month after dropping 10% in October and rising 3% in September. Palladium has plummeted 47% so far this year. Currently, the DG spot price is up $30.70 an ounce to $981.00.

Spot platinum retreated 2% Tuesday to $908.90 an ounce, and it’s down 3% in the first two days of the week. Platinum fell 0.7% in November after gaining 3.5% in October and declining 6.6% in September. Platinum is down 15% in 2023. The DG spot price is currently up $6.40 an ounce to $916.00

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