Gold Ticks Down On Strong Jobs Data

Gold Ticks Down On Strong Jobs Data

Gold ticks down this morning on surprisingly strong jobs data. The bullion slipped after hitting its highest level in almost a month early Friday.

Nonfarm payrolls jumped 528,000 in July while the unemployment rate was 3.5%, surging past the Dow Jones estimate of 258,000 jobs. Also on the rise was wage growth with average hourly earnings leaping 0.5% for July and 5.2% from a year ago, higher than estimates. The street quickly shifted to pricing in the greater chance of a 0.75 percentage point hike for the next Federal Reserve meeting in September. The Dow opened 200 points lower and gold futures has now fallen over $20 an ounce.

Before the jobs data hit, gold prices were elevated as the dollar weakened and fears of an economic downturn mounted after a rate increase by the Bank of England and forecasts of a recession amid a tight labor market.

Front-month gold futures rose 1.7% Thursday to settle at $1,806.90 an ounce on Comex. The December contract increased 1.4% in the first four days of the week. Bullion dropped 1.4% in July after falling 2.2% in June and 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. The December contract is currently down $22.10 (-1.22%) an ounce to $1784.80 and the DG spot price is $1771.60.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.03% Thursday to 1,000.32 metric tons, Reuters reported.

The Bank of England announced its biggest single interest rate increase since 1995 on Thursday and projected a lengthy recession, largely because of inflation caused by high natural gas prices from the Ukraine war. The move came just over a week after the Federal Reserve boosted interest rates by another 75 basis points. It raised rates by the same amount in June as part of an effort to rein in soaring inflation.

The BOE’s 50-basis-point increase took borrowing costs to 1.75% and was the central bank’s sixth consecutive hike.

The Fed’s favorite inflation measure, the personal consumption expenditures index, reached the highest level since January 1982 in June, data released a week ago showed. The PCE rose 6.8% in June, according to the Bureau of Economic Analysis. A previous report showed the U.S. consumer price index rose 9.1% in June.

In addition to recession fears, tensions between the U.S. and China over Taiwan, ongoing uncertainty over the pandemic and the war in Ukraine have kept gold prices elevated.

China fired live missiles near Taiwan on Thursday in its largest-ever drills in the Taiwan Strait. Japan said five ballistic missiles landed in Japan, triggering a significant increase in tensions.

September silver futures rose 1.2% Thursday to settle at $20.12 an ounce on Comex. The front-month contract decreased 0.4% in the first four days of the week. Silver slipped 0.8% in July after declining 6.2% in June and falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. The September contract is currently down $0.592 (-2.94%) an ounce to $19.530 and the DG spot price is $19.74.

Spot palladium increased 2.7% Thursday to $2,097.00, though it slid 2.8% in the first four days of the week. Palladium rose 9.9% in July after losing 2.9% in June and 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price is up $23.00 an ounce to $2138.50.

Spot platinum rose 4.1% Thursday to $937.90 an ounce. It’s up 3.5% so far this week. Platinum retreated 0.3% in July after losing 7.2% in June. It dropped 9.4% last year. The DG spot price is flat this morning, off $1.40 an ounce to $936.50.


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