The effects of a stronger dollar and a tightening labor market weighed on gold prices this morning, pushing the precious metals into negative territory on Thursday morning. Spot gold lost about 0.75% after the opening bell in New York, sliding to $1,240/oz. Spot silver was down about 7¢ to trade at $18.32/oz.
Platinum prices slumped about 1.8%, falling below $1,000/oz, while palladium was flat.
Jobless Claims Lower
The major news driving market activity this morning was the announcement by the Department of Labor that weekly jobless claims fell by 19,000 last week. This placed the measure close to its lowest point in 44 years. It also marked the 104th consecutive week—two full years—that first-time jobless claims came in below 300,000, a streak not seen since 1970.
We’re approaching the lowest rate of Americans filing for new unemployment benefits since record-keeping began. The official national unemployment rate is now just 4.8%, which many would consider at or near “full employment.”
Running With the Bulls
The markets took this latest snapshot of the labor market as a fairly bullish sign, although equities in the U.S. still were trading modestly in the red by 11 am EST. It appears that Wall St is taking a breather after soaring about 1.4% on Wednesday to yet again reach new all-time highs. The Dow Jones is now comfortably above 21,000 (weren’t we just talking about Dow 20K?) and the Nasdaq is nearing 5,900. The S&P 500 slipped back below 2,400, however. A number of trading departments at financial institutions had flagged 2,400 as their year-end target for the index, which will now likely be revised higher.
There has been a good deal of buzz on the NYSE about the upcoming initial public offering (IPO) for Snap, Inc., the parent company of the popular picture-sharing app SnapChat. Despite a track record of mercurial growth, the technology company (like its competitors) has an unproven business model. The firm is currently being projected at a valuation above $20 billion after selling 200 million shares at $17 per share. However, the company did lose over $500 million during the 2016 fiscal year, a cause for some caution.
Around the rest of the globe, shares were mixed in Europe and Asia alike on Thursday, with Japan’s Nikkei 225 rallying 0.88% overnight as the Shanghai Composite closed 0.52% lower.
The U.S. dollar got a clearer boost from the jobless numbers, rising 0.3% on the DXY index to break the 102.0 threshold. This largely accounted for the drop in the gold price, and has been attributed to rising rate hike expectations from the Fed. Each of the dollar’s major peers lost ground. The euro fell to $1.05, the pound sterling slipped below $1.23, and the yen neared ¥114.5 per USD. Each of these matched January lows for the currencies.
Traders dumped Treasurys amid the stock market rally yesterday, sending 10-year T-note yields sharply higher to 2.45%.
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