Gold price plunges to three-month low, in spite of soft U.S. jobs report
New York (July 2) Gold futures continued their extended slide on Thursday falling to a three-month low, in spite of a weaker dollar pushed down by a relatively soft U.S. jobs report.
On the Comex division of the New York Mercantile Exchange, gold for August delivery plunged to an intraday low of 1,156.00 a troy ounce, before rallying slightly to 1,163.80, down 5.50 or 0.47% on the session. The precious metal closed lower for the 10th time in 12 sessions plummeting to its lowest level since March 18. Gold had traded above $1,200 an ounce as recently as June 22.
Gold likely gained support at 1,142.40, the low from Mar. 17 and was met with resistance at 1,187.70, the high from June 23.
On Thursday morning, the U.S. Department of Labor's Bureau of Labor Statistics said non-farm payrolls in June rose by 223,000, slightly lower than consensus estimates from economists of a 230,000 gain. The slight pullback comes a month after a robust report in May when the economy added 280,000 non-farm jobs. The Labor Department also revised the May figure downward on Thursday by 26,000 to 254,000.
Average hourly wages also remained flat on a month to month basis, one month after surging 0.3% in May. Analysts forecasted a 0.2% increase in wages for June.
The unemployment rate, meanwhile, ticked down to 5.3% slightly above consensus forecasts for a 0.1% decline to 5.4%. In May, the unemployment rate inched up by 0.1% to 5.5%. The U-6 unemployment rate, a broader gauge of the employment outlook throughout the U.S., fell 0.3% to 10.5%. The rate measures the total level of unemployment in the labor market along with the rate of marginally attached workers, as well as the level of part-time workers in the workforce. Marginally attached workers are defined as people currently without jobs who are not currently looking for work, but have sought employment in the last 12 months. The U-6 rate is a measure preferred by Federal Reserve chair Janet Yellen, as she weighs the strength of the labor market.
The relatively benign employment report could convince dovish policymakers at the Fed to delay the timing of a highly anticipated interest rate hike beyond September. Last month, Yellen reiterated that the Fed would like to see continued improvement in GDP, wage and inflationary growth before it lifts short-term interest rates for the first time in nearly a decade.
Gold, which is not attached to dividends or interest rate, struggles to compete with high-yield bearing assets in periods of rising rates.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.25% to 96.23 amid a wave of downbeat U.S. economic data.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for September delivery inched up 0.01% to 15.578 an ounce.
Copper for September delivery gained 0.004 or 0.14% to 2.634 a pound.
Source: Investing.com
