The price of gold dipped last week following strong data on jobs in the United States, which showed that nonfarm payrolls rose by more than 250,000 jobs in September. The report reduced expectations of an aggressive reduction in rates from the Fed, boosting the greenback.
Figures show that traders reduced expectations for a rate cut from 28% to almost 0% once the payrolls data was released.
Spot gold slipped to $2,649.69 an ounce, a 0.2% decrease. This is after its record high of $2,685.42 an ounce. U.S. gold futures also dropped by 0.4% to reach $2,667.80 an ounce.
The report showed that job growth in the United States accelerated last month, with the rate of unemployment dropping to 4.1%. This eased pressure on the Federal Reserve to deliver another 50-basis point rate cut at its policy meeting set for November. Job gains also point to a resilient economy, with the report by the Department of Labor showing that wages increased at a solid pace in September.
The report also shows that the economy added 72,000 more jobs in August and July, which is higher than projected.
September’s estimates for job gains ranged between 70,000–220,000, with the three-month average of job growth recorded monthly going from 140,000 in August to 186,000 last month. In a statement, Jonathan Millar, a senior economist at Barclays, stated that the report reinforced resilience for the U.S. economy. He noted that this reduced concerns of deterioration in labor market conditions.
During the same period, the dollar index rose to a seven-week high, which made bullion more expensive for buyers outside the U.S.
TD Securities’ Commodity strategist Daniel Ghali explained that increasing geopolitical tensions were limiting the scope of accounts that were seeking to sell the precious yellow metal. Investors normally turn to gold as a safe-haven asset, particularly during times of turmoil. The metal appreciates in an environment with low rates of interest.
This comes after military strikes orchestrated by the IDF across the Gaza Strip killed even more Palestinians. Blue Line Futures’ chief market strategist Phillip Streible believes that gold futures could easily surge to $2,700, and even exceed this limit, if geopolitics plays a role.
In other news, spot silver also saw its price increase to $32.21 an ounce, a 0.5% increase. Palladium remained steady at $1,000 per ounce while platinum saw its price drop slightly to $989.33 an ounce, a 0.1% decline.
The overall downward trend in the Fed rate could draw investors toward adding gold to their portfolios or obtaining some gold stocks, such as Torr Metals Inc. (TSX.V: TMET), in order to leverage the bullish prospects of this precious metal.
NOTE TO INVESTORS: The latest news and updates relating to Torr Metals Inc. (TSX.V: TMET) are available in the company’s newsroom at https://ibn.fm/TMET
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