Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold gained 1.2% to close above $2,354 after another round of weak employment data brightened the outlook for rate cuts from the Fed, pressuring Treasury yields and lifting alternative assets. Silver added 1.6% to finish at $29.95 an ounce.

ADP reported private payrolls added a meager 152,000 jobs in May, the smallest number this year, and Aprils total was revised lower to 188,000. Job openings have fallen to the lowest level in three years and hiring has dropped off in recent months, increasing the chances for a pivot by the Fed toward lower interest rates this fall.

Fed fund futures traders have raised their bets on a quarter-point rate cut in September to 71%, up from 65% before the jobs data and less than 50% just weeks ago. This Fridays release of the more authoritative nonfarm payrolls report should give additional clarity on the job market and rate cuts.

Potentially complicating the Feds outlook, the US services sector grew again in May, with the ISM PMI rebounding to 53.8% from 49.4% in April, where any reading under 50% signals contraction. Roughly 70% of US workers are employed in services industries.

Benchmark 10-year Treasury yields retreated under 4.3% on the soft ADP report, lifting gold by reducing the opportunity cost for holding it instead of bonds as a safe-haven asset.

However, the dollar picked up 0.3% against major rivals after Canada became the first G7 nation to cut interest rates. The quarter-point reduction to 4.75% is the first in four years. The ECB is expected to follow suit when it meets tomorrow.

Also lifting gold, US benchmark WTI crude rebounded 1.1% to close above $74 after five straight losing sessions brought bargain-hunters into the market. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Platinum and palladium picked up 0.4% and 1.6%, respectively.

At the New York spot close: gold gained $28.60 to $2,354.10; silver rose 46 cents to $29.95; platinum added $4,.40, to $1,000.30; and palladium advanced $14.20 to $924.50 an ounce.