Gold Holds Near $1,320/oz On Nonfarm Payrolls Miss

January 5th, 2018 by

After a disappointing jobs report from the Department of Labor on Friday, spot gold traded 0.45% below where it closed the previous day. The yellow metal hovered around $1,316/oz following its 10th consecutive trading session of gains on Thursday.

The silver price was down 7¢ (-0.4%) $17.14/oz while the Platinum Group Metals moved in opposite directions: platinum was up 0.1% to $963/oz and palladium slipped 0.6% to about $1,085/oz.

December’s nonfarm payrolls report was a huge miss, as 148,000 jobs were added during the month—well below expectations of nearly 200,000. Although manufacturing employment was strong, job losses in the retail sector dragged down the results. The data also showed that wages grew by 2.5% year-on-year, marginally better than during November but still considered a disappointing pace. The national unemployment rate held steady at 4.1%. Elsewhere in North America, Canada’s unemployment rate actually dropped to its lowest in four decades.

Nonetheless, a general narrative of consistent growth across the global economy has lifted stocks to start 2018. The Dow Jones passed the 25,000 threshold for the first time ever on Thursday. All three U.S. indices, in fact, are charting new all-time highs to close out the first week of the new year.

The same story has taken place across European, Asian, and emerging markets, as well. Japan’s Nikkei 225 index gained 0.9% overnight to its highest in a quarter-century. An index of emerging market equities also rose to multi-year highs. This all comes despite global debt reaching an all-time high of $233 trillion. It’s worth noting that the acceleration of global growth during the fourth quarter of 2017 marked the first time that all of the world’s developed economies were growing at the same time since before the Great Recession.

Friday morning saw the U.S. dollar essentially flat at 91.9 on the DXY index. Forex trading was fairly quiet across the board. The yen fell 0.4% to ¥113.2 per dollar and the euro gave up 0.3% to return to $1.20. The rally for commodities finally began to slow as WTI crude lost 1% to fall back to $61.40/bbl. However, bitter winter conditions across the U.S. and a nor’easter battering the East Coast have sent energy prices skyrocketing in some localities.

The 10-year Treasury yield was at 2.45% on Friday morning, up more than 10 basis points over the last month. The price of bitcoin swung nearly $1,000 higher in early trading this morning to break back above $16,000 per BTC.

 

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.

3 thoughts on “Gold Holds Near $1,320/oz On Nonfarm Payrolls Miss

    1. Everett Millman Post author

      Unless something dramatically disrupts markets, I think $1,350 is a more likely target by the end of the month. That was the 2017 high so you can expect a lot of selling from hedge funds, banks, and ETFs to lock in some profit if gold prices get much above that.

      But there are a number of factors looming out there that could cause a big disruption: a government shutdown in the U.S., rising tensions with North Korea, a correction in the stock market, etc. So there’s definitely the potential that one of those things causes more money to quickly rush into the gold market, in my opinion. It just may not come to pass by the end of the month.

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