Gold Falls Following Employment Report

June 1st, 2017 by

The main economic news that markets were digesting on Thursday morning was the unexpected jump in weekly jobless claims, as reported by the Labor Department. Overall, the reaction was more positive than negative, with stocks in the U.S. rising at the opening bell just behind the pace of their European counterparts.

The precious metals were slightly lower in response to this morning’s activity, with gold prices losing about 0.5% to trade around $1,262 per ounce. Silver slid farther, tumbling 1.7% to just a hair above $17/oz. Palladium saw fairly quiet action, adding just $2 (+0.25%) to approach $820/oz. Platinum was the biggest loser of the group, shedding more than 2% to fall to a three-week low of $927/oz.

Jobless Claims Jump

Weekly jobless claims rose to a five-week high, climbing more than economists had expected. Nonetheless, the 248,000 new claims filed was still taken as a healthy indicator for the labor market, as this marks the 117th straight week—yes,  you read that right, 117th!—that claims have held below 300,000. (That’s more than two years in a row. It’s the longest such streak since 1970.)

As a result, the unexpected surge in claims was shrugged off by traders and investors amid the larger picture of continued improvement to the employment situation in the U.S. There is also a theory circulating that the higher number of claims is merely a transitory development related to the recent Memorial Day holiday weekend. The holiday caused several states to estimate their initial jobless numbers, which will likely be revised in the coming weeks.

The weekly jobless report is merely a prelude to tomorrow’s key nonfarm payrolls numbers for the month of May. The NFP at the end of each month have consistently moved markets, so expect the early action in the markets on Friday to correspond to whatever it contained in the data. On Thursday, the forecast from ADP suggested that the Labor Department will report strong job gains for May in tomorrow’s report.

In the oil market, there are stories surfacing from last week’s OPEC meeting that the cartel considered an addition reduction in output of 1% to 1.5% in an attempt to support higher oil prices. Such a proposal may still be on the table. Crude oil prices were mostly flat early during Thursday’s session. After an up-and-down couple of weeks, the dollar seems to have stabilized a bit, gaining 0.25% against a basket of its major peers as measured by the DXY. Accordingly, government bonds saw no major fluctuations, as the 10-year yield on Treasurys remained around 2.23%.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.