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Gold futures settled modestly lower Friday but notched a weekly gain, as a closely watched report on U.S. employment came in better than expected, perhaps affirming the perception that the Federal Reserve will likely hold off on further interest rate cuts after delivering its third reduction in a row on Wednesday.
However, weakness in manufacturing activity and lower bond yields capped gold’s slide.
Gold for December delivery GCZ19, -0.25% on Comex fell $3.40, or 0.2%, at $1,511.40 an ounce, after gaining 1.2% on Thursday, which then marked the highest most-active contract finish since Sept. 26 and largest one-day dollar and percentage climb since Oct. 2.
For the week, the precious metal notched a 0.4% advance based on the most-active contracts finish from a week ago.
December silver SIZ19, -0.15% shed 1.5 cents, or 0.1%, to end at $18.052 an ounce, a day after gold’s sister metal rose 1.1% on Thursday, for its first settlement above $18 since Sept. 25. For the week, silver gained 0.7%.
The U.S. created 128,000 new jobs in October, with hiring stronger at the end of summer than previously reported, easily topping the 75,000 forecast of economists surveyed by MarketWatch and suggesting the economy is still holding up better than expected despite trade turbulence and a slowdown in global growth.
On top of that, job gains for previous months were raised. The government lifted the increase in new jobs in September to 180,000 from 136,000 and August’s gain were raised to 219,000 from 168,000.
“Gold is a touch lower as the solid US jobs data encouraged traders to take on more risk, which has prompted them to drop assets like gold,” wrote David Madden, market analyst at CMC Markets, in a Friday note.
The upbeat U.S. employment report is a negative for gold that has prospered on the prospect of a weakening economic outlook. Prices for precious metals also have enjoyed gains amid doubts about the U.S.’s ability to secure a substantial trade resolution with China.
Earlier this week a news report that said China officials have doubts over prospects for a long-term trade deal with the U.S. fed declines in U.S. stocks and haven demand for gold.
However, Fawad Razaqzada, technical analyst at the Forex.com, said that commodity traders will need more than just one month of data to chill gold buying.
“I don’t think it’s a game changer by any means,” Razaqzada said. The jobs report, although it was good, we need several months of data to convince the Fed[ not to cut interest rates,” he said.
Contributing to gold’s slippage on Friday was an intraday record carved out by the Nasdaq Composite Index COMP, +0.91% for the first time since July 26 and the S&P 500 index SPX, +0.83% aiming for its third record close this week and its 16th in 2019.
Offsetting the good news on U.S. employment, the Institute for Supply Management said its manufacturing index fell to 47.8% last month from 49.1%, marking the lowest level since June 2009. American manufacturers posted the biggest contraction in September since the end of the 2007-09 recession, reflecting a slowdown in the U.S. and global economies made worse by a tense trade war with China.
Meanwhile, outlays for U.S. construction projects rose 0.5% in September at a seasonally adjusted annual rate of $1.29 trillion, the Commerce Department reported Friday. Economists polled by MarketWatch had expected growth of 0.3%.
Razaqzada said that yields for government debt, perceived as another haven asset along with gold, have held lower and that has helped to mitigate gold’s decline because rising yields for sovereign paper tend to compete with gold and undercut appetite for bonds. The 10-year benchmark Treasury yield TMUBMUSD10Y, +2.64%, for example, is at 1.73%, compared with 1.80% last Friday. Bond yields fall as prices rise.
In other metals trade, January platinum PLF20, +1.84% gained $20.30, or 0.9%, to close at $954 an ounce, its highest level since late September, FactSet data show, with a weekly advance of 2.2%.
Meanwhile, December palladium PAZ19, +1.33% jumped $28.70, or 1.6%, to settle at $1,784.30 an ounce, with a gain for the week of 2.3%.
December copper HGZ19, +0.80% added 1.5 cents, or 0.6%, to end at $2.653 a pound but finished with a weekly loss of 0.8%.
