Gold Slips Briefly Below $1700

Gold Slips Briefly Below $1700

Gold slips briefly below the $1700 an ounce mark as U.S. jobs numbers show growth in September. The yellow metal still aiming for its biggest weekly gain since March.

U.S. jobs data shows a solid gain even though it missed expectations. Per the Labor Department’s report on Friday, Nonfarm payrolls increased 263,000 in September, compared to the Dow Jones estimate of 275,000. The unemployment rate was 3.5% vs the forecast of 3.7%. Gold dropped just over $10 an ounce on the news, but has since clawed back above $1700.

A strong U.S. jobs report will likely be bearish for the yellow metal, with a weak report bearish. That’s because investors are watching for the data with an eye to future Federal Reserve interest rate increases. Indications that the labor market is tightening may cause the central bank to slow the pace of its planned rate increases to rein in runaway inflation. 

The ADP employment report, released Wednesday, showed strength in September. The data showed private companies added more jobs than expected last month – 208,000 for the month, topping the 200,000 estimate by analysts surveyed by Dow Jones before the report. But initial jobless claims data for last week, released Thursday by the Labor Department, rose from a five-week low.

Front-month gold futures were unchanged Thursday, settling at $1,720.80 an ounce on Comex. The December contract gained 2.9% in the first four days of the week. Bullion fell 3.1% in September and 7.5% in the third quarter. The metal is down 5.9% this year. Currently, the December contract is down $12.80 (-0.74%) an ounce to $1708.00 and the DG spot price is $1699.80.

New applications for unemployment benefits rose more than forecast last week, by 29,000 to 219,000, compared with a Bloomberg consensus forecast for 204,000. 

Investors are closely watching indicators for signs that the Fed’s 300 basis points in interest rate increases so far this year are starting to affect the economy – and possibly drive it into a recession. Rates went up by 75 basis points each in June, July and September, and there’s another meeting coming up in November. 

Earlier this week, a report showed that U.S. manufacturing grew at it slowest pace in two and a half years in September.

But Fed officials indicated that they remain committed to tackling high inflation. Fed Governor Christopher Waller said Thursday that he sees little need for the central bank to slow the pace of its tightening measures and emphasized that fighting inflation is critical. Inflation tracked by the personal consumption expenditures price index, the Fed’s favorite inflation measure, was stronger than analysts had expected in August, according to data released last week. 

Investors are betting there’s a 74.3% chance of a 75-basis-point rate increase at the next meeting of Fed policymakers in early November, with 25.7% projecting a 50-basis-point hike, according the CME FedWatch Tool. A week ago, just 56.5% of investors anticipated a 75-basis-point increase, with 43.5% predicting a 50-basis-point hike. 

Front-month silver futures gained 0.6% Thursday to settle at $20.66 an ounce on Comex. The December contract rose 8.5% in the first four days of the week. Silver advanced 6.5% in September and fell 6.5% in the third quarter. It’s down 12% this year. The December contract is currently down $0.195 (-0.94%) an ounce to $20.465 and the DG spot price is $20.36.

Spot palladium increased 0.9% Thursday to $2,291.00 an ounce and is up 3.7% so far this week.  Palladium gained 5.9% last month and 13% in the third quarter. It’s up 20% in 2022. Currently, the DG spot price is down $37.80 an ounce to $2258.00.

Spot platinum advanced 0.7% Thursday to $932.10 an ounce, and it’s up 6.8% so far this week. Platinum rose 2.6% in September. It fell 4% in the third quarter and is down 4.2% this year. The DG spot price is currently up $4.60 an ounce to 933.40.

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