Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.8% to close just above $2.036 after a blowout nonfarm payrolls report and other hot US data shifted the outlook for interest rates, lifting yields and the dollar while pressuring alternative assets.

The metal still gained 1% for the week, supported by safe-haven inflows because of geopolitical turmoil and lingering Fed worries.

The economy added a whopping 353,000 jobs in January, nearly doubling forecasts, and hourly earnings rose by the most since March 2022, according to government data. The unemployment rate held at 3.7%, staying under 4% for two straight years, the longest period in more than half a century.

In separate reports, consumer sentiment surged to the highest level in 30 months as American’s felt better about falling inflation and the economy. And factory orders rose 0.2% in December, in line with expectations.

Benchmark 10-year Treasury yields jumped above 4% for their biggest one-day rise in 28 months as traders speculated that the Fed may postpone rate cuts. Rising yields weigh on gold by increasing the opportunity cost for holding it instead of bonds.

Fed fund futures trading puts the odds of a May rate cut at 70%, down from around 95% before the NFP data. A March cut is now almost out of the question, with the likelihood of dropping to 20%, according to CME FedWatch.

Tracking higher with yields, the dollar added 0.9% to reach the highest level in seven weeks. A stronger buck pressures gold and other commodities by making them more expensive in other currencies, limiting overseas demand.

Gold’s relatively mild drop in the face of sharp rises in yields and the dollar, along with its weekly gain of 1% despite a relatively hawkish Fed meeting this week, is testimony to its solid underlying demand. The threat of a wider war in the Middle East and worries that the Fed may wait too long and hamstring the economy are both contributing to safe-haven inflows.

The other precious metals were lower for the day a week. Silver shed 1.4% today and less than 0.1% this week. Platinum fell 2.2% on the day and the week. Palladium dropped 2.3% for a weekly loss on 1.2%.

At the New York spot close: gold fell $16.90 to $2.036.10; silver slid 33 cents to $22.80; platinum dropped $20.70 to $901.60; and palladium shed $22.60 to $949 an ounce.