Gold futures bounced back on Friday to their highest close since April, with prices rising a fourth week in a row, off the back of the surprisingly weak May jobs report for the US.
The US added a modest 138,000 new jobs last month while figures for March and April were cut by 85,000 compared to what was initially reported.
Economists had been looking for between 180,000 and 185,000 new non-farm jobs in May and some warn that the US jobs surge is coming to an end.
Curiously that sent gold and silver higher, US shares higher, the dollar lower (which is good for gold) and the price of US government bonds higher (and the yields lower) in a day of contradictory movements that left everyone none the wiser.
Some commentators saw the news as casting doubt on the pace of US interest-rate rises this year (one is locked in for later this month and the weakish May jobs data won’t change that) and the Fed has made it clear it sees whatever weakness there is in the economy as ’transitory”.
The new jobs and fall in the jobless rate to 4.3% has had no impact on US inflation (it has fallen for the last three months) or on wages which the jobs report showed rose 0.2% in May for an annual rate of 2.5%, down from 2.9% at the end of 2016.
US core inflation is down from 1.9% at the end of last year to 1.5% at the moment (annual rates).
The number of jobs in March was slashed from the weak restated 98,000 to just 50,000 in the latest report and the very strong 2011,000 in April was slashed to 174,000 – still solid, but that means there were 85,000 fewer jobs created in those two months.
So Comex August gold climbed $US10.10, or 0.8%, to settle at $US1,280.20 an ounce. Prices, based on the most-active contracts, settled at their best level since April 21 and rose around 1% for the week, according to FactSet, the uS financial data group.
The unemployment rate, meanwhile, fell again to 4.3% from 4.4% and touched the lowest level since 2001. Yet the fall stemmed more from people leaving the labour force than an increase in the number who found jobs.
Friday’s jump was a turnaround from Thursday when the consensus was for a big 200,000 plus jump in new jobs.
Comex July silver rose 24.4 cents, or 1.4%, to $US17.525 an ounce—finishing about 1.2% higher for the week. Comex July copper fell 1.3 cents, or 0.5%, to $US2.575 a pound, with prices up around 0.3% on the week.
