Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.6% to close near $1,870, a fresh seven-month high, as slowing wage growth and weak services data raised hopes for a less-aggressive Fed. The metal finished the week with a gain of 2.4%.

The US economy added 223,000 new jobs in December and the unemployment rate dipped to 3.5%, signaling momentum in hiring despite increasing economic headwinds.

But more to the Fed's liking, wage growth slowed to an annualized 4.6%, suggesting that inflationary pressures are ebbing and a dreaded wage-price spiral, in which rising prices beget higher wages beget higher prices, is unlikely.

Against this otherwise solid employment backdrop, job cuts in the beleaguered technology sector are rising sharply. To name a few, Amazon announced it will lay off 18,000 million workers; Salesforce will cut 10% of its staff; and Cisco announced additional Silicon Valley layoffs in addition to cutting 5% of its global workforce.

The ISM reported that the US services sector contracted in December, posting its first negative index reading since the depth of the pandemic closures in 2020. Including business like retailers, restaurants, businesses, healthcare, and many others, the services sector constitutes roughly two-thirds of the economy.

Benchmark 10-year Treasury yields plummeted below 3.6% as these signs of broadening weakness in the economy drove investors toward safety. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar plunged 1.1% against major rivals as traders speculated that falling wage pressure and the weakening economy will make the Fed less aggressive in raising rates in coming months. A weaker dollar buoys gold and other commodities by making them less expensive in other currencies, boosting overseas demand.

The other precious metals were higher for the day and mixed for the week. Silver rose 2.4% on the day but still slipped 0.2% this week. Platinum climbed 3.2% for a weekly gain of 2%. Palladium jumped 4.3% to pull out a weekly increase of 0.5%.

At the Comex close: February gold gained $29.10 to $1,869.70; March silver added 56 cents, to $23.98; April platinum picked up $34.70 to $1,104.30; and March palladium climbed $74 to 1,806.70 an ounce.