Gold Slips On Job Numbers

Gold Slips On Job Numbers

Gold slips on job numbers this morning after dropping a little overnight when investors took profits following yesterday’s surge.

Despite coronavirus fears, private U.S. payrolls rose by 183,000 for February, outpacing the forecast of 155,000, according to a report Wednesday from Moody’s Analytics.

The yellow metal had rocketed up 3.1% Tuesday on Comex after both a surprise interest-rate cut from the U.S. Federal Reserve and plummeting equities boosted gold as an alternate investment. The most-active contract settled at $1,644.40 an ounce Tuesday, within reach of a new seven-year high. Currently, the April contract is slightly off at $1,641.50.

The Fed slashed rates by 50 basis points in a unanimous decision by Federal Open Market Committee members. The first emergency rate cut since 2008 came amid mounting fears that the spread of the coronavirus will curb global economic growth. Fed Chairman Jerome Powell said in a press conference after the announcement that it’s a “material change” to the Fed’s economic outlook.

“The fundamentals of the U.S. economy remain strong,” according to the FOMC statement. “However, the coronavirus poses evolving risks to economic activity.”

The coronavirus, designated COVID19, has killed more than 3,200 people worldwide and sickened more than 93,000. Most of the cases have been in China, where the outbreak started. The virus is a WHO-designated global health emergency.

U.S. stocks slid again Tuesday, with the Dow Jones Industrial Average dropping 2.9% and the Standard & Poor’s 500 Index sliding 2.8%. Equities had their worst weekly performance since the Great Recession last week. Both lower interest rates and declining equities are typically bullish for gold. The Dow has bounced back this morning, up over 500 points at the opening bell.

Gold faces technical resistance around $1,660 an ounce, with support around $1,630, Jigar Trivedi, a commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai, told Reuters.

CME FedWatch Tool has jumped to showing a 100% of rate cut on the next Fed meeting on March 18th and a 100% chance of a rate cut on the following meeting on April 29. In other economic news, investors awaited the release of U.S. ISM nonmanufacturing PMI data and the Fed’s Beige Book of regional economic conditions later Wednesday.

May silver futures rose 2.7% Tuesday to settle at $17.19 an ounce on Comex. Front-month silver futures gained 4.4% in the first two days of this week after dropped 12% last week. Silver is a bit off this morning, with the May Contract at $17.135.

Spot palladium, a metal used primarily in autocatalysts, slid 1.5% Tuesday to $2,503.13 an ounce. It decreased 3.5% last week but rallied 14% in February. It is currently at $2,479.27.

Spot platinum increased 1.9% Tuesday to $879.69 an ounce. It fell last week and currently stands at $878.59.

Platinum supply will exceed demand by 1.5% in 2020, indicating “a balanced market,” according to a report released early Wednesday by the World Platinum Investment Council. The group had previously predicted a “sizeable surplus.” Demand for the metal by the auto industry will rise this year, but not enough to make up for a drop in investment buying, the report said. That will leave the market in surplus again, the council said.

Meanwhile, the “ongoing unavailability of palladium has become more pronounced into 2020, increasing further the likelihood of platinum demand growth as it substitutes for palladium in autocatalysts,” it said.

 

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