Gold ticks down Friday morning on the release of a key U.S. jobs report for September, which may provide signals on the timing and size of the Federal Reserve’s planned upcoming interest rate cuts.
The yellow metal dipped this morning as investors digested the Labor Department’s September jobs data. Spot gold fell 0.8% to $2,634.50 per ounce, after scaling a record high of $2,685.42 last week. U.S. gold futures were about 0.6% lower at $2,661.80. The U.S. economy added 254,000 more jobs to nonfarm payrolls, beating the expected 150,000 jobs, pointing to a strong labor market. The unemployment rate fell to 4.1%, down 0.1 percentage point. Average hourly earnings increased 0.4% on the month and were up 4% from a year ago. Both figures were ahead of respective estimates.
Gold remained near record highs, supported by the likelihood of rate hikes and on haven demand related to the conflicts in the Middle East.
Private payrolls data from Wednesday’s ADP Employment Report showed better-than-expected growth in September Wednesday. But weekly initial jobless claims climbed more than anticipated last week in data released Thursday.
Front-month gold futures rose 0.4% Thursday to settle at $2,679.20 an ounce on Comex, and the most-active December contract advanced 0.4% in the first four days of this week. Bullion gained 5.2% last month after advancing 2.2% in August and increasing 5.7% in July, its biggest monthly gain since March. The metal rose 13% in 2023. The December contract is currently down $8.80 (-0.33%) an ounce to $2670.40 and the DG spot price is $2652.40
The Fed has said it closely watches both labor market and inflation data when determining monetary policy, which is what makes the September jobs report important.
Private companies added 143,000 jobs last month, better than both the 128,000 consensus forecast by economists and August’s 103,000. The Fed’s favorite inflation measure, the personal consumption expenditures price index, came in lower than expected on Friday. Looser monetary policy is typically bullish for precious metals, increasing their appeal as alternate investments.
The Fed lowered interest rates by 50 basis points last month to 4.75% to 5.00%. The central bank had kept them at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
All investors tracked by the CME FedWatch Tool agree that the Fed will likely cut rates again in November. Expectations of a 25 basis point reduction surged this morning to 91%, while the rest anticipate a 50 basis point one. The Fed has two scheduled policy meetings left this year, and most investors tracked by the tool expect rates to drop to 4.00% to 4.25% or lower by the end of 2024.
Separately, Israeli warplanes carried out midnight airstrikes on an underground bunker just south of the Lebanese capital of Beirut and concerns mounted about the possibility of all-out war between Israel and Iran.
Front-month silver futures increased 1.7% Thursday to $32.46 an ounce on Comex, and the December contract gained 2% in the first four days of the week. Silver rallied 7.9% in September after gaining 0.7% in August and dropping 2.1% in July. It ticked up 0.2% in 2023. The December contract is currently down $0.254 (-0.78%) an ounce to $32.210 and the DG spot price is $32.02.
Spot palladium dropped 1.5% Thursday to $1,013.00 an ounce and is down 1.3% so far this week. Palladium gained 3.2% in September after increasing 3.2% in August and decreasing 4.3% in July. Palladium plummeted 38% last year. The DG spot price is currently up $5.40 an ounce to $1019.00.
Spot platinum slid 1% Thursday to $1,000.00 an ounce, and it decreased 1.2% in the first four days of the week. Platinum increased 5.6% last month after sliding 5.2% in August and losing 2.1% in July. Platinum dropped 6.8% in 2023. Currently, the DG spot price is slightly up $1.10 an ounce to $1000.70.
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