Gold futures surged to a fresh all-time high to close out a bullish trading week. The yellow metal has been on a tear and has shown zero signs of slowing down. Precious metal prices could target $2,400 before the month is finished as more investors capture the gold bug, even as Treasury yields and the US dollar strengthen.
June gold futures advanced $31.90, or 1.38%, to $2,340.30 per ounce at 14:53 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold is poised for a third consecutive weekly gain of nearly 4%, adding to its year-to-date increase of 13%.
Silver, the sister commodity to gold, also trended higher to finish the trading week. May silver futures picked up $0.133, or 0.49%, to $27.38 an ounce. The white metal will enjoy a weekly jump of 9%, adding to its year-to-date rally of 14%.
US financial markets concentrated on the March jobs data that came in stronger than expected. The US economy added 303,000 new jobs while the unemployment rate dipped to 3.8%. Average hourly earnings rose 0.3% monthly and slowed to 4.1% year-over-year. The labor force participation rate climbed to 62.7% and average weekly hours inched higher to 34.4.
Government and government-related sectors led the employment gains: health care (72,000), government (71,000), and social assistance (9,000). In addition, construction created 39,000 jobs, leisure and hospitality payrolls increased by 49,000, and retail positions rose by 18,000.
Investors fear that the solid economic landscape could force the Federal Reserve to abandon rate cuts this year, especially if inflation is reaccelerating.
“While the number of new jobs rose, so too did the pressure on the Fed to skip rate cuts this year,” said Andrew Crapuchettes, RedBalloon CEO and pioneer in development of labor market data analytics for business use. “Most small business owners no longer believe the Fed will cut rates this year. The March jobs may just be confirming that sentiment.”
However, considering that the futures market is still penciling in a 61% chance of a rate cut at the June Federal Open Market Committee (FOMC) policy meeting, gold prices are ignoring the doves.
Gold is sensitive to fluctuations in interest rates because it influences the opportunity cost of holding non-yielding bullion.
Meanwhile, the yellow metal is also shrugging off rocketing Treasury yields and a greenback.
The benchmark ten-year Treasury yield surged 6.9 basis points to 4.378%. The two-year yield climbed 7.4 basis points to 4.715%, while the 30-year bond tacked on 6.5 basis points to 4.536%.
The US Dollar Index (DXY), a gauge of the buck against a basket of currencies, advanced 0.29% to 104.43, from an opening of 104.12. The DXY is on track for a weekly dip of 0.2%, but it is still up 3% year-to-date.
A stronger greenback is bearish for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.
In other metal markets, May copper futures tumbled $0.0245, or 0.58%, to $4.2245 per pound. May platinum futures declined $19.80, or 2.08%, to $932.80 an ounce. May palladium futures dropped $31.80, or 3.05%, to $1,009.50 per ounce.