AGE Daily Gold Update

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

6/4/2021: Gold rebounds after soft jobs report

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rebounded 1% to close at $1,892 after weaker-than-expected payrolls data pressured bond yields and the dollar, stoking demand for alternative assets. The metal still slid 0.7% for the week to mark its first weekly loss since March.

The government's nonfarm payrolls report showed a disappointing 559,000 new jobs were added May, well short of the forecast 771,000. The bulk of the new hires were in businesses that cut the most jobs during the pandemic, such as restaurants, hotels, and entertainment venues.

Following April's abysmal job growth of less than 300,000, the disappointing May tally signals ongoing problems in labor markets and takes pressure off the Fed to tighten monetary policy ahead of schedule.

Meanwhile, labor costs rose as employers tried to lure workers with higher wages to fill openings, lifting medium-term prospects for higher inflation.

Benchmark 10-year Treasury yields retreated sharply to as low as 1.55% after the NFP on diminished expectations that the Fed will raise interest rates anytime soon. Lower yields and rising inflation are highly supportive gold. Falling yields lower the opportunity cost for holding it instead of bonds, while rising inflation increases demand for the metal as a hedge against loss of purchasing power.

The dollar also weakened after the jobs report, dropping 0.4% from a three-week high as traders lowered expectations of premature monetary tightening. A falling dollar helps gold and other commodities by making them cheaper overseas.

The other precious metals were higher for the day but mostly lower for the week. Silver jumped 1.5% but still lost 0.4% this week. Platinum added 0.2% but slide 1.5% on the week. Palladium climbed 0.6% to notch a weekly gain of 0.4%.

At the Comex close: August rebounded $18.70 to $1,892; July silver picked up 42 cents to $27.90; July platinum added $1.90, to $1,164.40; and September palladium climbed $15.60 to $2,842.20 an ounce, ending around 0.4% higher for the week.