Gold Slides Below $1,800 on Monster July Jobs Report

Gold futures tumbled to finish the trading week, although the yellow metal is still on track for a weekly gain. Gold prices slumped on a monster jobs report that doubled most market estimates, leading expectation of an ultra-hawkish tightening campaign by the Federal Reserve. Will gold touch $1,800 again next week?

December gold futures fell $15.00, or 0.83%, to $1,791.90 per ounce at 18:00 GMT on Friday on the COMEX division of the New York Mercantile Exchange. The precious metal will post a weekly boost of about 0.5%, bringing its year-to-date loss to around 2.1%.

Silver, the sister commodity to gold, fell below $20. October silver futures shed $0.277, or 1.38%, to $19.845 an ounce. The white metal will post a weekly drop of 2.4%, adding to its 2022 loss of about 15%.

The big story on Friday was the better-than-expected July jobs report. According to the Bureau of Labor Statistics (BLS), the US economy added 528,000 jobs in July, more than double the market estimate of 250,000. The unemployment rate dipped to 3.5%.

Average hourly earnings surged 5.2% year-over-year, average weekly hours were unchanged at 34.6, and the labor force participation rate slipped to 62.1%.

The labor snapshot was broad-based, with nearly every sector reporting job growth, led by leisure and hospitality, professional and business services, and health care.

The impressive July jobs report could force the Federal Reserve to pull the trigger on a 100-basis-point rate hike at next month’s Federal Open Market Committee (FOMC) policy meeting. Since the labor market can withstand the central bank’s current tightening cycle, the Fed could front-load its rate hikes and become more aggressive with a full-point increase.

This speculation sent the US Treasury market through the roof, with the benchmark 10-year yield up 15.6 basis points to 2.832%. The one-year bill added 15.6 basis points to 3.272%, while the 30-year bond rose 10.8 basis points to 3.07%.

A rising-rate environment is typically bearish for gold because it lifts the opportunity cost of holding non-yielding bullion.

The US Dollar Index (DXY), which gauges the greenback against a basket of currencies, spiked on the numbers. The index rallied 0.82% to 106.56, from an opening of 105.69. The gain erased its weekly loss and gave the DXY a weekly increase of 0.63%. Year-to-date, the DXY is up around 11%.

A stronger buck is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

In other metal markets, October copper futures tacked on $0.071, or 2.04%, to $3.5525 per pound. October platinum futures picked up $2.00, or 0.22%, to $926.20 an ounce. October palladium futures jumped $51.00, or 2.45%, to $2,128.50 per ounce.

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