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AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.


7/5/2019: Gold falls on payrolls, rate view

Source: Bill Musgrave, American Gold Exchange

Austin — Gold fell 1.5% but held above $1,400 as robust jobs data eased recession worries and boosted the dollar, dulling demand for alternative store of value. The metal ended the holiday-shortened week down 1% after closing at a 6-year high above $1,420 yesterday.

US nonfarm payrolls added 224,000 jobs in June, well above forecasts and far more than May's meager 72,000. The unemployment rate ticked up from 3.6% to 3.7% while 12-month wage growth remained unchanged at 3.1%.

The rebound in hiring helped to quell immediate fears that the 10-year economic expansion might be grinding to halt. Escalating trade tensions have punished manufacturing and business investment. And while consumer spending remains relatively solid, the crucial services sector slid to a 2-year low last month, according to the ISM. The Atlanta Fed projects GDP growth in the second quarter has slowed to just 1.3% from 2.8% in Q1.

Against this backdrop, traders were hoping the Fed would deliver a half-point reduction in interest rates when it meets at the end of July. Today's strong payrolls report tempers that expectation. CME FedWatch has lowered the chances of a half-point cut to 5%, down from nearly 30% yesterday, based on Fed-fund futures trading. But a quarter-point cut remains almost universally anticipated, with FedWatch placing the odds at 95%.

The dollar rose 0.6% to more than a two-week high on the shift in Fed rate view. A deeper rate cut would weaken the dollar by making it less attractive to foreign exchange investors seeking higher yield. A stronger dollar pressures gold and other commodities priced in it for global trade by making them more expensive overseas.

Wall Street also slid on the revised rate expectations, with the S&P 500 and Dow dropping 0.2% each. Warnings of a recession in corporate earnings further damaged risk appetite. With the unofficial start of Q2 earnings season two weeks away, the number of S&P 500 companies forecasting a decline in profits rose to the highest level in 13 years, according to MarketWatch.

The other precious metals were down for the day and mixed for the week. Silver fell 2.2% on the day and week. Platinum tumbled 3.8% for a weekly loss of 3.5%. Palladium edged down 0.1% but still gained 1.7% this week.

At the Comex close: August gold fell $20.80 to $1,400.10; September silver lost 34 cents to $15; October platinum lost $32.20 to $811.40; and September palladium dipped $1.60 to $1,564.20 an ounce.

  

Metal Ask      Change
Gold $2,235.81           Price Change Down Arrow $-2.68
Silver $25.08           Price Change Down Arrow $-0.06
Platinum $918.61           Price Change Down Arrow $-0.56
Palladium $1,051.50           Price Change Up Arrow $0.26
In US Dollars