AGE Daily Gold Update

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

1/7/2022: Gold rises on weak jobs data

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.5% to close above $1,797 on bargain-hunting after a weak payrolls report pressured the dollar, boosting alternative stores of value. The metal lost 1.7% for the week, its worst since late November, under pressure from an increasingly hawkish Fed.

The US economy added merely 199,000 jobs in December, fewer than half of most forecasts, suggesting that stubborn labor shortages and a resurgent pandemic are still hamstringing the economy. The data was recorded before the Omicron surge.

On the plus side, the unemployment rate fell from 4.2% to 3.9%, a pandemic low. And wages rose 0.6% for an annual increase of 4.7%, the fastest increase in decades. But with consumer inflation surging 6.8% though November, the gains have not kept up with the cost of living.

Benchmark 10-year Treasury yields edged slightly higher to 1.766% as bonds traders looked past the weakness of the nonfarm payrolls report and focused on the falling unemployment rate.

Analysts do not expect the Fed to be put off its tightening course. Fed funds futures are pricing in a 90% probability of a quarter point hike in March, with a total of three likely this year. Rising rates create a headwind for gold because higher yields increase the opportunity cost for holding it instead of bonds as a safe-haven asset.

But with consumer inflation of nearly 7%, real yields (adjusted for inflation) will remain deeply negative for a long time come, supporting gold as a cost-effective hedge against loss of purchasing power.

The dollar fell 0.6% against major rivals as weak jobs data and frightening covid rates raising questions about the course of the near-term recovery. A falling dollar typically lifts gold and other commodities by making them less expensive in other currencies.

The other precious metals were mixed for the day and week. Silver recouped 1% but still lost 4% this week. Platinum fell 0.4% for a weekly loss of 1%. Palladium jumped 2.6% today for a weekly rise of 0.6%.

At the Comex close: February gold gained $8.20 to $1,797.40; March silver added 22 cents, to $22.41; April platinum dropped $4.20 to $956.50; and March palladium rose $47.70 to $1,921.60 an ounce.