Gold futures turned higher Friday, trimming their weekly loss to about 0.7%, after the latest health check on the U.S. job market came in a bit softer than expected in some areas.
The report still largely supports the Federal Reserve’s path toward higher interest rates but may give the central bank little reason to turn more aggressive with hikes, a factor that limits the dollar’s upside and boosts gold.
The U.S. economy added a fewer-than-expected 164,000 jobs last month while the unemployment rate tipped below 4% for the first time since 2000. Inflation data within the report was also cooler than expected; the average hourly wage paid to American workers rose 4 cents, or 0.1%, to $26.84. The yearly rate of pay increase was unchanged at 2.6% for the third month in a row.
“Gold prices get a modest boost from a U.S. employment report non-farm jobs number that was weaker than market expectations. However, a firmer U.S. dollar index is limiting the upside in gold and silver,” said Jim Wyckoff, senior analyst with Kitco Metals. “The marketplace is deeming the report a bit weaker than expected, but not enough to change the course of U.S. monetary policy.”
After the release, June gold GCM8, -0.08% rose $2.30, or 0.2%, to $1,315 an ounce. Gold had dropped in three of the four sessions through Thursday and was lower ahead of the jobs report. It was trading as low as $1,305.60 midweek — the lowest since March 1.
Wyckoff said gold bulls may be energized by a close above last week’s high of $1,337.60, while bears are keeping a close eye out for any retreat below the much-scrutinized $1,300 line.
The ICE U.S. Dollar Index DXY, +0.32% which measures the buck against a basket of six currencies, pared its gain though was clinging to positive territory, up 0.1% at 92.49. The index this week grazed its highest level since late December. The 10-year Treasury note yield TMUBMUSD10Y, -0.15% slipped to 2.939%. The closely watched yield has struggled to hold above the 3% line it hit late last month. Higher Treasury yields can spell weakness for gold, which, like other commodities, offers no yield.
U.S. stocks pointed to a lower open. For the week, the Dow industrials were set for a 1.6% slide as of Thursday’s close, while the S&P 500 was looking at a 1.5% fall and the Nasdaq at a 0.4% decline.
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The Fed will have a another opportunity to direct market interest-rate expectations in the same week that an official post-meeting statement revealed its members expect an inflation uptick closer to the Fed’s 2% target. Several Fed officials are scheduled to speak on Friday. New York Fed President William Dudley kicks off the speeches at 12:45 p.m. Eastern, covering “financial tumult of our times and challenges ahead.” Then, San Francisco Fed President John Williams is set to appear at a monetary policy conference at the Stanford University’s Hoover Institution at 3 p.m. Eastern. A host of Fed officials participate in an evening panel at that conference.
Trade issues also remain in focus as U.S. and Chinese officials were meeting for discussions on tariffs and other issues. Worries about trade hostilities between the top two global economies have roiled financial markets in recent months, underpinning some demand for haven gold. The U.S. has handed China a lengthy list of demands, the Wall Street Journal reported, including a demand to reduce the bilateral trade deficit by at least $200 billion by the end of 2020. The deficit stood at $375 billion last year.
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Columnist Mark Hulbert, writing for MarketWatch, said Friday that calendar behavior indicates this is the wrong time to buy gold. Gold has a six months on/six months off seasonal pattern, just like the stock market, he said. Right now through the end of summer appears to be gold’s downtime.
In other metals trading, July silver SIN8, +0.05% rose 2 cents, or 0.1%, to $16.475 an ounce. It headed for a roughly 0.1% weekly drop.
July copper HGN8, -0.15% traded at $3.0585 a pound, down 0.6%. July platinum PLN8, -0.18% fell 0.1% to $903.00 an ounce, but June palladium PAM8, -0.34% fell 0.1% to $957.55 an ounce.
In ETF action, the SPDR Gold Shares GLD, -0.01% traded near steady and the iShares Silver Trust SLV, +0.13% gained 0.1%, while the VanEck Vectors Gold Miners GDX, -0.29% traded 0.5% higher.