Financial Circles Network November 6 news, the US October non-farm data exceeded expectations, but the number of people who chose to join the labor market and rising inflation dimmed the outlook for economic growth, gold futures returned above $1800 on Friday and hit their highest close since early September.
Gold futures for December delivery on the New York Mercantile Exchange rose $23.30, or 1.3 percent, to close at $1,816.80 an ounce, the highest closing price since Sept. 3, and gold futures rose about 1.8 percent this week. Silver futures rose 25 cents, or 1 percent, to close at $24.157 an ounce for December, and silver futures rose 0.9 percent this week.
Data released friday showed the U.S. created more jobs than expected, but the number of people who chose to enter the labor market last month was disappointing, and rising inflation dimmed the outlook for strong economic growth. The U.S. Department of Labor reported that non-farm payrolls rose 531,000 in October, almost double the September data and well above market expectations.
Jeff Wright, chief investment officer at Wolfpack Capital, said the non-farm payrolls data was "very good and exceeded expectations, but the labour force participation rate remains below 62 percent, which could continue to benefit gold prices." The Fed has always been cautious when labor force participation is low, paying less attention to the overall unemployment rate of 4.6 percent and 4.8 percent — something that many people who could have returned to work didn't do. "There is still some way to go before the implementation of quantitative easing is reduced, and it is not as drastic as some experts fear or warn," he said.
Chintan Karnani, head of research at insignia consultants, said traders are also concerned about inflation, with the consumer price index and producer price index set to be released next week and are expected to be very high. Gold is often seen as a hedge against inflation.
U.S. Treasury yields fell on Friday after strong employment data released, reducing the opportunity cost of holding non-yielding assets such as gold, with the 10-year Treasury yield falling to 1.458 percent from 1.524 percent on Thursday. The Federal Reserve board on Wednesday announced plans to begin reducing the size of the bond purchases that the market has widely expected and hinted at patience with rate hikes, causing U.S. Treasury yields to fall and gold futures to rise 1.7 percent on Thursday.
Cadillo, chief market economist at Spartan Capital Securities, said in a note that gold prices have been in the $30 range of $1,770 to $1,800 an ounce. He said that if the range is lower, there are solid buys in the lower range, while the closing position is still in the higher range, which indicates that the current battle to overcome strong resistance in the higher range is still a problem. However, given that the Fed is currently paving the way for monetary policy tightening next year, the gold market is likely to remain subdued. ”
Wolfpack Capital's Wright said he believes gold prices are currently about neutral and that prices could fluctuate in both directions. He said the $1,800 an ounce level was an important obstacle, and gold had been unable to maintain that level in the past, but if gold did break through that threshold, gold "could accelerate rapidly."
Among the other metals traded on the exchange, copper rose 0.5% to $4.343 per pound in December. Platinum rose 0.6% to $1,035.80 an ounce in January, closing up about 1.5% this week. Palladium rose 1.6% to $2,027.60 an ounce in December, up 2.4% in a single week.
This article originated from the Financial Circle Network