Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinSpot gold gained 0.4% to close above $2,042 despite upbeat employment data and an uptick in Treasury yields as bargain-hunters entered the market after the metal slipped around 2% over the previous four sessions.

ADP reported 164,000 new jobs were added to private payrolls in December, beating expectations by around 30,000. Most of the new hires were in service companies like healthcare and hospitality.

In addition, first -time jobless claims fell to a three-month low of 202,000 last week, signaling solid momentum in the labor market.

Benchmark 10-year Treasury yields crept back toward 3.9% as traders speculated that an improving employment picture may slow the Fed’s pivot toward rate cuts in the first quarter. Rising yields are often a headwind for gold because they increase the opportunity cost for holding it instead of bonds.

Yesterday’s mildly hawkish minutes from the Fed’s December meeting also put a slight damper on rate-cut fervor. While acknowledging a growing consensus on the FOMC that inflation is under control, the Fed’s statement stressed that monetary policy may “remain at a restrictive stance for some time.”

Fed funds futures trading now put the odds of a quarter-point decrease in March at 65%, down from 70% yesterday.

After initially rising with yields after the employment data, the dollar slipped against major rivals as investors prepare for tomorrow’s more-definitive measure of the labor market, the government’s nonfarm payrolls report. A falling dollar lifts gold by making it cheaper overseas.

The other precious metals were mixed, with silver adding 0.2% while platinum and palladium fell 2% and 3.1%, respectively.

At the New York spot close: gold gained $8.10 to 2,042.30; silver picked up 4 cents to $22.99; platinum dropped $20.80 to $966.30; and palladium shed $33.30 to $1,037.80 an ounce.