Gold posts back-to-back loss as jobs report looms
By Wallace Witkowski and Rachel Koning Beals
Published: Aug 3, 2017 2:13 p.m. ET
Silver futures close 0.6% lower for third day of declines
AFP/Getty Images
Gold futures slipped for a second session in a row Thursday as investors awaited a read on the pace of inflation from the Friday jobs report.
Investors will be looking for clues in Friday’s report for the likelihood of a follow-up U.S. interest-rate hike later this year. Although data have been solid, including a 17-year low for the jobless rate and strong corporate earnings, the economy has offered few signs of sustained inflation that might hasten the Federal Reserve’s plan to tighten monetary policy.
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December gold GCZ7, -0.33% settled down $4, or 0.3%, at $1,274.40 an ounce. The contract has fallen since it settled Tuesday at $1,279.40—its highest since June 8.
The ICE U.S. Dollar Index DXY, -0.07% remained near the 15-month lows hit in recent days, and was last up less than 0.1% at 92.85.
Wage-inflation data due out Friday will be of primary importance to investors, said Ira Epstein, managing director at the Linn Group, in an interview.
“The rest of the world is talking about getting out of their easy-money policies but the U.S. is about a year ahead of them,” Epstein said. “Now we’ve raised rates, but we’re not getting the inflation we thought.”
Friday’s nonfarm-payrolls report, the U.S. is expected to have added 180,000 jobs last month. The unemployment rate is expected to stay near a 16-year low of 4.4%, according to a MarketWatch survey. A report out Thursday showed jobless claims hovering near 44-year lows.
The pace of hiring in the U.S. has already slowed sharply since hitting a postrecession peak of 250,000 a month in 2015. It continues to churn ahead, so far showing few red flags for wage-induced inflation.
“The present postures of the dollar index and the euro [which is trading at a 2 ½-year high against the dollar] are bullish for the precious metals markets,” said Jim Wyckoff, senior analyst with Kitco Metals. However, “a quieter geopolitical landscape this week is not benefiting the safe-haven gold market.”
“There are plenty of world issues simmering on the back burner that could come to the fore very quickly and ignite some safe-haven demand for gold,” Wyckoff added.
Record-high U.S. stock markets and general global stock gains have lured investors to riskier assets away from gold, but analysts continue to wonder if stock gains can be supported without the pro-growth pledge, most notably tax reform, from President Donald Trump’s administration. The early outlines of Trump’s agenda were often cited as drivers of assets, including a rise in stocks.
Gold and the U.S. currency unit typically move inversely as a cheaper dollar is beneficial to gold investors using weaker currencies. Both markets are affected by interest-rate policy, as higher rates support the dollar but also dull the appeal of nonyielding gold in favor of interest-bearing assets.
Beyond rates, market statistics have flashed a potential warning for gold demand. Global demand for the metal fell 14% in the first half of 2017 due mainly to a sharp decline in purchases by exchange-traded funds, the World Gold Council said.
As for ETF trading Thursday, the SPDR Gold GLD, +0.12% rose 0.1%, while the iShares Silver Trust SLV, +0.32% advanced 0.4% and the VanEck Vectors Gold Miners ETF GDX, -0.31% declined 0.2%.
Back on Comex, September silver SIU7, -0.65% settled down 10 cents, or 0.6%, to $16.63 an ounce, for a third day of declines as it pulled back from one-month highs hit Monday. September copper HGU7, -0.23% settled down less than a penny, or 0.2%, to $2.878 a pound.
October platinum PLV7, +1.32% rose $10.80, or 1.1%, to settle at $964.60 an ounce, for its sixth straight session of gains. September palladium PAU7, -0.92% slid $11.20, or 1.3%, to settle at $881 an ounce.
\MW
