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Metals Stocks: Gold trades near a 3-month high after a weaker-than-expected U.S. April jobs report

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Gold prices climbed to their highest level in almost three months Friday after a closely watched reading of U.S. labor conditions in the U.S. for the month was much weaker than forecast.

U.S. nonfarm payrolls were “significantly below recent estimates,” said Jason Teed, co-portfolio manager of the Gold Bullion Strategy Fund QGLDX.

The U.S. Labor Department reported Friday that the economy gained 266,000 jobs in April, far fewer than even the most subdued forecast for the month and raising some questions about the strength and pace of the recovery from the COVID pandemic.

Gold prices “spiked in response, likely due to some expectations that the [Federal Reserve] will continue to keep interest rates low for the time being,” Teed told MarketWatch. “This would make the metal relatively more attractive to investors than bonds.”

Indeed, Minneapolis Fed President Neel Kashkari, speaking on Bloomberg after the Friday jobs report, said that April surprise for jobs shows the importance of basing monetary policy on outcomes, not forecasts.

June gold
GCM21,
+1.04%

GC00,
+1.04%

was up $18.50 an ounce, or 1%, at $1,834.20 an ounce, following a 1.8% rise Thursday. Prices for the most-active contract was trading around 3.8% higher for the week and poised to mark their highest finish since Feb. 10, FactSet data show.

July silver
SIN21,
+0.03%
,
meanwhile, shed 0.3% to $27.40 an ounce, looking at a 5.9% rise for the week after settling Thursday at the highest since late February.

Following the jobs data, ” one thing is clear — that the [Fed] loose monetary policy isn’t going anywhere soon,” said Naeem Aslam, chief market analyst at AvaTrade, in a market update.

“The dollar index was weaker going into the release of this data and now we know for certain that there is plenty of more weakness ahead” for the dollar, he said, which would tend boost prices for dollar-denominated commodities such as gold.

The ICE U.S. Dollar Index
DXY,
-0.70%

shed 0.7% Friday, contributing to a weekly loss of 1%.

Gold futures closing above $1,800 on Thursday was “important for keeping the near-term uptrend in place,” said Dan Russo, portfolio manager at Potomac Fund Management.

On a technical trading basis, the two important price levels to watch in terms of “upside potential” are at roughly $1,868 and $1,914 an ounce, he told MarketWatch. Prices are likely to see a “far amount of resistance that must be overcome” in the $1,900 to $1,950 zone.

So the jobs data “was likely enough of a disappointment to satisfy the gold bulls, especially after it closed above $1,800,” and at the same time, the report will likely calm fears that the Fed “will back off of it easy money policy stance sooner than expected,” Teed said.

And “the longer that the market expects the Fed to remain accommodative, the longer there will likely be a tailwind for copper prices,” he said.

Copper futures climbed to a record high on Friday, with the July contract
HGN21,
+3.15%

up 2.5% at $4.72 a pound, after touching an intraday high at $4.73.

Read: Copper looks to set fresh record as economic recovery, electric cars drive rise in metal’s price

Also see: Electric vehicle market growth is a blessing for some metals — and not a big worry for oil

July platinum
PLN21,
-0.36%

lost 0.3% to $1,253.70 an ounce, trading up 4% from the week-ago settlement, while June palladium
PAM21,
-0.83%

fell 1.5% to $2,903 an ounce, down 1.7% for the week after climbing past $3,000 earlier this week to touch a record high.

Also see: Iron-ore prices hit a record high with appetite for steel ‘far beyond expectations’

Bond Report: 10-year Treasury yield falls below 1.50% on weak U.S. jobs report, then bounces back

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