Weekly Round-Up: Gold Price Dampened by US Jobs Data

Precious Metals

A positive US jobs report hurt gold and silver prices on Friday. Meanwhile, copper recovered and oil prices diverged.

The gold price sat below $1,300 per ounce Friday (June 1) morning after positive US jobs data left market watchers confident that the US Federal Reserve will be able to stick to its rate hike plans. 

As of 12:30 p.m. EST on Friday, the yellow metal was sitting at $1,296.10, headed for its lowest finish in over a week. It traded above the $1,300 mark earlier in the week.

According to Reuters, government data shows that the US economy added 223,000 jobs in May, with average hourly earnings rising 0.3 percent. Both numbers came in higher than experts had estimated, and unemployment fell to an 18-year low of 3.8 percent.

“It’s a good report all around. It literally checks off all the right boxes,” Tom Porcelli, chief US economist at RBC Capital Markets, told the news outlet. “The Fed didn’t need a report nearly this strong for them to have continued on course, a report like this is sort of icing on the cake.”

The central bank is expected to move forward with at least two more rate hikes in 2018, with its next meeting set for June. Interest rate increases tend to weigh on non-yielding assets like precious metals.

Like gold, silver traded lower on Friday after the US jobs report, clocking in at $16.44 per ounce as of 12:30 p.m. EST. The white metal’s highest price for the week was $16.55 on Thursday (May 31).

On the base metals side, copper prices fell to a three-week low on Wednesday (May 30), but climbed 0.39 percent on Friday to $6,854.50 per MT.

Copper-focused investors have their eye on BHP Billiton’s (ASX:BHP,NYSE:BHP,LSE:BLT) massive Escondida mine, where labor talks are due to begin. Last year, a protracted strike at the mine boosted copper prices and hurt production.

In other base metals news, the International Nickel Conference took place on Thursday and Friday of this week in Toronto, with experts gathering to discuss the market. Our first interview featuring Mark Selby of RNC Minerals (TSX:RNX) is now up, and more content is due out next week.

Finally, this week brought a divergence between Brent and US crude futures. According to Reuters, US crude futures were trading as much as $11 below Brent on Thursday, the deepest discount since 2015. That price action caused problems for many investors who had expected the opposite to happen.

“The market doesn’t know where the price of oil is going to be and probably doesn’t know where it should be, and so it’s open to some major price fluctuations,” independent analyst Richard Hastings told the news outlet.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

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