Goldbugs received a timely reminder on Friday night, our time, that the price of the metal is more tied to the strength of the US economy and greenback than any other factor, while oil prices again surged in the wake of the tremendously strong US jobs report for January (and the revisions going back to November) which saw a total of half a million new jobs reported for the three months.
The report showed 257,000 new jobs in January, plus 242,000 extra jobs found in December (72,000) and November (172,000), with the unemployment rate rising to 5.7% as more people flooded back into the growing work force looking for jobs.
US wages also improved markedly in January after the weakness in December and for much of 2014.
As a result the US dollar firmed, US interest rates rose as more and more investors convinced themselves of a rate rise from the Fed in the third quarter, and perhaps another at the end of the year, according to some pessimists/optimists.
The Aussie dollar dipped a touch in weekend trading in the Middle East and Asia to just on 77.96 – that was higher over the week, and despite the five and a half year low hit on Tuesday after the surprise interest rate cut from the Reserve Bank.
In commodities, oil finished the week with a surge and all up had its best weekly rise since 2009 and has had its strongest fortnight since 1998, with the price rising 19% for Brent and a couple of per cent less for US crude.
But gold fell the most since mid January while copper also rose, ending the week 3% higher.
Brent crude futures, the global oil benchmark, jumped 9.5% last week to end at $US58.03 a barrel early Saturday, our time, while the main US benchmark, West Texas Intermediate futures ended the week 7.8% higher at $US52.01 a barrel.
Gold dropped sharply when the jobs numbers were released in the early US morning on Friday, promptly giving up its small early gains to slide 2.4% to $US1,232.6 per troy ounce, the biggest one-day drop since last June.
That took gold’s losses this week to almost 4% and it’s around $US90 an ounce above the low of $US1,144 an ounce hit last November.
March silver also lost 50c, or 2.9%, to end at $US16.694 an ounce, with prices down around 3% for the week.
Copper for March delivery fell a penny, or 0.4%, to $2.586 a pound, up more than 3% for the week.
Helping push oil higher was another fall in US oil rig use last week.
Oil services group’s regular weekly report on US oil rig use showed another fall to 1,456 (down 83 from the week before, according to Reuters) and now 24% below its level in December and the lowest number in use since March 2010.
But for the moment, US oil stocks remain at their highest level for 80 years for this time of year (403 million barrels).
For now, the nation’s crude supplies stand at their highest on record, according to US Energy Information Administration data going back to the 1980s.
US March natural gas futures fell by 0.8% to $US2.58 per million British thermal units, a loss of 4.2% for the week and an added headache for many fracking groups, not to mention coal companies which are being strangled by weak demand and falling prices.
