Gold ticks up on mixed jobs report and is poised for a second week of gains as economic data points to slowing inflation.
The news that nonfarm payrolls grew 187,000 for the month, above the forecasted 170,000, per the Bureau of Labor Statistics was balanced by unemployment numbers, giving gold a boost. The unemployment rate was 3.8%, up significantly from July and the highest since February 2022. Average hourly earnings increased 0.2% for the month and 4.3% from a year ago. Both were below respective forecasts of 0.3% and 4.4% and another possible sign that inflation pressures are easing.
The data on U.S. nonfarm payrolls is closely watched by the Federal Reserve – along with inflation data – when determining monetary policy. The Fed’s favorite inflation measure, the personal consumption expenditures price index, came out Thursday and showed moderate gains. But the core price index posted the smallest back-to-back increase since 2020, a sign that inflation is slowing.
Front-month gold futures fell 0.4% Thursday to settle at $1,965.90 an ounce on Comex, and the December contract gained 1.3% in the first four days of the week. Bullion dropped 2.2% in August after rising 4.1% in July and losing 2.7% in June. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022. The December contract is currently up $8.00 (+0.41%) an ounce to $1973.90 and the DG spot price is $1949.20.
Core PCE, the index without volatile food and energy costs, rose 0.2% for a second month in July, according to the data from the Bureau of Economic Analysis. Overall PCE also increased 0.2% Inflation-adjusted consumer spending also increased 0.6% in July.
The slower growth is being read as a signal that the Fed’s series of interest rate hikes to curb inflation are having an impact. The Fed has raised rates by 5.25 percentage points since March 2022.
The question is whether rates have slowed enough for the labor market is strong enough for the Fed to pause or end its rate-hike cycle. Higher interest rates are typically bearish for gold, so an end or a pause to rate increases would give precious metals a boost.
About 93% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in this month at 5.25% to 5.50%. Just 7% expect it to raise rates another 25 basis points.
In other economic news, new U.S. applications for unemployment benefits fell slightly last week – but 4,000 to 228,000 in the week ended Aug. 26, according to data from the Labor Department released Thursday. But the August ADP employment report data Wednesday showed U.S. job growth slowed sharply in August, missing economists’ expectations. The U.S. economy also grew more slowly than previously estimated, according to Commerce Department data released Wednesday.
Front-month silver futures lost 1.2% Thursday to settle at $24.81 an ounce on Comex, and the December contract advanced 0.9% in the first four days of the week. Silver slipped 0.6% in August after gaining 8.5% in July and dropping 2.4% in June. It retreated 4.2% in the first half of the year after rising 3% in 2022. The December contract is currently up $0.168 (+0.68%) an ounce to $24.980 and the DG spot price is $24.68.
Spot palladium decreased 0.9% Thursday to $1,228.50 an ounce, and it lost 1% in the first four days of the week. Palladium fell 5.3% last month after rising 3.6% in July and falling 9.5% in June. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022. Currently, the DG spot price is up $9.30 an ounce to $1238.00
Spot platinum dropped 1.1% Thursday to $974.90 an ounce but is up 2.5% so far this week. Platinum advanced 1.7% in August after gaining 5.2% in July and falling 9.3% in June. Platinum dropped 15% in the first half of the year after surging 10% in 2022. The DG spot price is currently up $12.60 an ounce to $987.00.
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