Gold ticks up early Friday after a private report showed weak U.S. numbers, with the largest drop in more than 20 years for an October.
The report, issued by outplacement firm Challenger, Gray & Christmas on Thursday, offers some guidance on the state of the labor market given the dearth of federal statistics due to the government shutdown. The weakness in the labor market is increasing investor speculation that the Federal Reserve may go ahead and cut interest rates in December, something that Chair Jerome Powell said last month wasn’t a sure thing.
Lower interest rates are traditionally bullish for the gold market, making the yellow metal a more attractive alternate investment.
December gold futures fell $1.90 Thursday to settle at $3,991.00 an ounce on Comex, and the front-month contract lost 0.1% in the first four days of the week. Bullion increased 3.2% last month after surging 10% in September, the most in six months, and adding 5% in August. It’s up 51% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $3.90 (+0.10%) an ounce to $3994.90 and the DG spot price is $3992.40.
Job cuts surged 183% in October from September and 173% in October from the year earlier, the Challenger, Gray & Christmas report showed. Employment reductions were at the highest level for any October since 2003. The report cited increased adoption of AI, softening consumer and corporate spending and rising costs.
Separately, the monthly private payrolls report from ADP on Wednesday showed that the U.S. added just 42,000 jobs last month. The report only covers employment and private companies and is one of the few data points still available during the government shutdown, because it’s not issued by the government.
ADP will also begin issuing weekly jobs numbers, based on a four-week average, on Tuesdays starting next week, the company announced last week. The government shutdown extended into a 38thday Friday. It’s already the longest in history.
The Fed typically closely follows jobs and inflation data when setting monetary policy. The central bank is still widely expected to cut interest rates for a third consecutive time in December. Last week, the Fed reduced interest rates to 3.75% to 4.00%.
Almost 67% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by another 25 basis points in December. The rest anticipate that the Fed will leave rates unchanged. The cut last week was the second 25-basis point reduction in a row. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
Front-month silver futures fell 0.2% Thursday to settle at $47.95 an ounce on Comex, and the December contract slid 0.4% in the first four days of the week. Silver gained 3.3% in October after rising 15% in September, the biggest monthly rally in two and a half years, and climbing 11% in August. It rose 21% in 2024. The December contract is currently up $0.255 (+0.53%) an ounce to $48.205 and the DG spot price is $48.38.
Spot palladium lost 2.9% Thursday to $1,391.00 an ounce and is down 3.7% so far this week. Palladium rose 14% last month after rising 14% in September and declining 7.8% in August. Palladium dropped 17% last year. Currently, the DG spot price is down slightly by $1.40 an ounce to $1388.50.
Spot platinum decreased 1.6% Thursday to $1,542.20 an ounce and is down 2.6% this week. It advanced 1% in October after gaining 15% in September and rising 5.9% in August. Platinum lost 8.4% in 2024. The DG spot price is currently up $11.50 an ounce to $1547.10.
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