Gold futures are soaring to close out the trading week, giving the yellow metal a modest weekly gain. Gold prices are benefiting from a disappointing August jobs report that many investors think will give the Federal Reserve some pause on its tapering plans. Can gold next test the $1,840 and $1,850 range?
November gold futures advanced $20.60, or 1.14%, to $1,832.20 per ounce at 16:29 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold will enjoy a weekly jump of about 0.7%, paring its year-to-date loss to below 4%.
Silver, the sister commodity to gold, is skyrocketing on Friday and is looking to flirt with $25. October silver futures surged $0.847, or 3.54%, to $24.77 per ounce. The white metal is up 3.1% this week, lowering its 2021 decline to under 7%.
On Friday, the Bureau of Labor Statistics (BLS) released its non-farm payrolls data for August, a snapshot of the labor market was disappointing to investors. The US economy added 235,000 new jobs in August, down from the 1.053 million new positions in July. The market had penciled in a gain of 750,000 new jobs.
The unemployment rate fell to 5.2% in August, down from the 5.4% reading in July. This is essentially matches the median estimate.
As FX Daily Report noted:
Last month, employment gains were concentrated in professional and business services (74,000), transportation and warehousing (53,200), education and health care (35,000), and financial services (16,000). Hiring in the leisure and hospitality sector slowed, while retail trade and utilities shed 28,500 and 1,300 positions, respectively. The manufacturing industry created 37,000 jobs, while the government lost 8,000 positions.
The labor report also highlighted that average hourly earnings rose 0.6% to $30.73. Average weekly hours were unchanged at 34.7. The labor force participation rate was also flat at 61.7%.
Market analysts believe that this might be enough for the US central bank to refrain from decelerating its $120-billion-a-month asset-buying initiative. The Fed has signaled that it would begin unwinding its ultra-aggressive QE efforts by the end of the year, while leaving interest rates lower for longer.
This lifted gold prices since tapering taper talk could elevate inflation.
At the same time, the greenback slumped on Friday as the US Dollar Index (DXY), which measures the buck against a basket of currencies, tumbled 0.16% to 92.08. The index will record a weekly loss of 0.65% and pare its YTD jump to 2.4%. A weaker buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.
The Treasury market was mostly mixed, with the benchmark 10-year yield up 0.028% to 1.322%. The one-year bill slipped 0.001% to 0.066%, while the 30-year bond added 0.034% to 1.941%. Falling bond yields are also bullish for metal commodities because it reduces the opportunity cost of holding non-yielding bullion.
In other metal markets, October copper futures rose $0.0235, or 0.55%, to $4.3275 per pound. October platinum futures picked up $26.60, or 2.68%, to $1,020.80 an ounce. October palladium futures tacked on $16.10, or 0.67%, to $2,416.50 per ounce.