Gold futures struggles for direction to finish the trading week as a stellar January jobs report defied market expectations. With a strengthening US dollar in the background, the yellow metal is trying to stay above $1,800 to close out the first trading week of February. Will stop-and-start rallies be the norm for gold this year?
March gold futures rose $4.80, or 0.27%, to $1,799.30 per ounce at 13:40 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices are poised for a weekly gain of 0.5%, but they are still down about 1.5% year-to-date.
Silver, the sister commodity to gold, struggled to stay in positive territory. March silver futures edged up $0.01, or 0.04%, to $22.385 an ounce. The white metal is on track for a weekly loss of 0.5%, adding to its year-to-date decline of more than 4%.
The January jobs report stunned everyone, including the White House, which had warned about an abysmal jobs reading. FX Daily Report confirmed Friday:
In January, the US economy created 467,000 new jobs, much higher than what even the White House had expected. The market had forecast only 150,000 jobs.
According to the Bureau of Labor Statistics (BLS), the unemployment rate edged up to 4%, up from 3.9% in December. The market had also penciled in a reading of 3.9%.
Last month, the labor force participation rate increased to 62.2%, average hourly earnings rose 0.7% month-over-month, and average weekly hours dipped to 34.5.
Comparable to other labor reports, most of the job growth was situated in a handful of industries: leisure and hospitality (+151,000), professional and business services (+86,000), and retail trade (+61,000). Payrolls were little changed in most other sectors, such as construction, financial services, mining, government, and manufacturing.
Still, the financial markets were not exactly ebullient over the better-than-expected news, mainly because it will likely provide the Federal Reserve with more fuel to ramp up quantitative tightening.
Even in a rising-rate environment, some experts say gold can remain appealing in a chaotic stock market.
“While gold would typically come under threat in an environment where interest rates are rising due to its lack of a yield, its appeal as a haven asset at times of crisis and stock market plunges suggest that investors continue to see value in holding gold and it is premature to write the economic recovery story,” said Rupert Rowling, market analyst at Kinesis Money, in a note.
Treasurys were green across the board, including the benchmark 10-year yield up 0.078% to 1.905%. The one-year bill rose 0.085% to 0.852%, while the 30-year bond jumped 0.052% to 2.197%.
Growing yields are typically bearish for precious metals because it lifts the opportunity cost of holding non-yielding bullion.
The US Dollar Index (DXY), which measures the greenback against a basket of currencies, rose 0.2% to 95.57, from an opening of 95.31. Despite its strong performance to close out the trading week, it will post a loss of 1.75%. Year-to-date, DXY is down 0.4%. Overall, a stronger buck is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to acquire.
In other metal markets, March copper futures slid $0.01, or 0.22%, to $4.465 per pound. March copper futures shed $9.90, or 0.96%, to $1,020.00 per ounce. March palladium futures declined $20.70, or 0.89%, to $2,297.00 an ounce.