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Gold Sideways on January Jobs Report, Data-Dependent Fed

February 1, 2019 at 14:40 by Andrew Moran

Gold futures are finishing the trading week lower as the US government reported a better-than-expected labor report for January. Despite the decline, the yellow metal is still poised for a weekly gain of more than 1%. Lingering in the background is a report that another high-level meeting between American and Chinese leaders is on the horizon.

April gold futures dipped $0.90, or 0.07%, to $1,324.40 per ounce at 13:13 GMT on Friday. Gold prices, which surged 2.4% last month, are on track for a weekly jump of 1.2%.

Silver, the sister commodity to gold, is hovering around the important $16 threshold to close off the trading week. March silver futures tumbled $0.08, or 0.51%, to $15.99 an ounce. The white metal, which also climbed 1.5% in January, is getting ready to report a weekly boost of 1.52%.

According to the Bureau of Labor Statistics (BLS), the US economy created 304,000 new jobs in January, higher than market forecasts of 172,000 – ADP had projected 213,000 earlier this week. The unemployment rate rose to 4%, from 3.9% in December. Average hourly wages jumped three cents, or 0.1%, to $27.56 per hour; the 12-month rate of hourly wage gain increased to 3.2%.

Earlier this week, the Federal Reserve completed its two-day monetary policy meeting, explaining that the central bank will proceed with “patience” pertaining to how it raises interest rates. The market does not anticipate the first rate hike of 2019 until at least June. Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends traders into yield-bearing assets.

Meanwhile, the US dollar did not react much to the jobs numbers as the greenback slid 0.08% to 95.48. A weaker buck, which is set for a weekly loss of 0.3% and a monthly slide of 0.7%, is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.

In other metals markets, March copper futures dropped $0.0075, or 0.27%, to $2.77 per pound. March platinum futures tacked on $5.60, or 0.68%, to $830.30 an ounce. March palladium futures soared $33.00, or 2.54%, to $1,332.90 per ounce.

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