Gold Ticks Down On U.S. Jobs Data

Gold Ticks Down On U.S. Jobs Data

Gold ticks down on Friday morning’s U.S. jobs data, likely headed for fourth weekly drop. The yellow metal’s spot price slipped $7 an ounce on the news that U.S. jobs grew more than expected in June, but has rebounded from much of that loss.

Job growth leapt up in June with nonfarm payrolls rising 372,000, far outpacing the forecast of 250,000, per the Bureau of Labor Statistics. Average hourly earnings increased 0.3% for the month and up 5.1% year-over-year, just beating the 5% expected by the street. The wage number likely supporting the Fed’s current plan for rate increases aimed at controlling inflation. Fed officials have indicated a 0.75 percentage point rate hike is likely at their July meeting.

Gold prices were heading lower for the week as the yellow metal has come under pressure because of strength in the dollar, currently at 20-year highs. The U.S. currency has gotten a boost from expectations of a series of interest-rate increases to combat inflation and recession fears.

August gold rose 0.2% Thursday to settle at $1,739.70 an ounce on Comex. The front-month contract dropped 3.4% so far this week, positioning it for the biggest weekly drop in eight weeks. Bullion fell 2.2% in June after tumbling 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. The August contract is currently slightly down $0.90 (-0.05%) an ounce to $1,738.80 and the DG spot price is $1,741.40.

Federal Reserve policymakers are widely expected to boost interest rates by another 75 basis points later this month in an attempt to rein in skyrocketing inflation. U.S. inflation  remained high in May, according to the Federal Reserve’s favorite measure, though there were signs that it started to ease, data released last week showed. 

Fed Governor Christopher Waller said Thursday that he would back the 75 basis point hike this month and a 50 basis point increase in September. Separately, St. Louis Fed President James Bullard backed the 75 basis point hike in July, saying the best approach is to act quickly and then assess the impact of the rate hikes. 

Anticipation of the Fed’s move have bolstered the dollar and caused Treasury yields to soar. Higher interest rates and bond yields raise the opportunity cost of holding gold, pressuring the yellow metal.

While most haven investors are turning to the dollar and Treasurys, gold still has some support because of uncertainty over the pandemic, the war in Ukraine, the change in leadership in the U.K. and Friday’s assassination of former Japanese Prime Minister Shinzo Abe. 

September silver futures increased 0.2% Thursday to settle at $19.19 an ounce on Comex. The precious metal is down 2.4% so far this week. Silver declined 6.2% in June after falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. The September contract is down $0.043 (-0.22%) an ounce to $19.145 and the DG spot price is $19.28.

Spot palladium climbed 4.7% Thursday to $2,038.00 an ounce and is up 2.3% so far this week. It fell 2.9% in June after losing 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price is up a strong $71.10 an ounce to $2.099.50.

Spot platinum rose 2% Thursday to $883.80 an ounce, though it’s down 1.1% for the week. It decreased 7.2% in June after gaining 2.3% in May and losing 9.4% last year. The DG spot price is currently up $3.70 an ounce to $890.50.


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