Gold Prices Nosedive Following Optimistic Jobs Report
7/8/2019 7:58:22 AM
Daily Gold & Silver Market Report – 7/5/2019
- U.S. economy adds 224,000 jobs in June, more than expected.
- Strong economic data sends Gold prices tumbling.
- Low industrial demand could prevent Silver rally.
Gold prices declined Friday morning after June U.S. jobs data proved to be much better than expected. The promising jobs numbers raised doubt in many investors that the Federal Reserve will indeed lower interest rates in the coming weeks. MarketWatch reports the U.S. dollar also strengthened, further challenging dollar-denominated Precious Metals prices. When dollar values increase, commodities priced in the U.S. currency become more expensive to buyers using other currencies. Spot Gold sank to $1,393.10 at 9:30 a.m. (ET), down from $1,424.67 less than 12 hours before. Leaders at the Fed recently stated they were considering interest rate cuts this year, but planned to monitor events a bit longer before making a firm decision.
According to the New York Times, 224,000 jobs were added in the U.S. in June, resulting in an unemployment rate of 3.7 percent. These numbers indicate the job market is slowing a bit, but not to the extent many economists predicted. Average earnings went up 6 cents an hour compared to May, further showing a slight rebound. Overall, unemployment is close to a five-decade low, and employers have added jobs for 105 consecutive months.
While positive economic reports often hinder support for Gold investments, several wildcards are still at play. There is still a lot of uncertainty in the manufacturing sector due to ongoing trade wars between the United States and countries such as China and Mexico. A recent report from the Institute for Supply Management showed the industry continued to struggle last month. Also, if economists determine a recession is in fact underway, the Federal Reserve could still decide to lower interest rates, which could be a major win for Gold prices.
Low Demand, Large Stockpiles May Prevent Silver Rally
As Gold has garnered a great deal of support in recent weeks, many market watchers have proposed Silver will soon follow. A recent report published by Nasdaq, however, reports low demand, large stockpiles and a sluggish economy are factors that could prevent a Silver rally. “Silver and Gold prices have traditionally moved together, with Silver tending to outperform Gold when the two are rising and fall faster when both are in decline,” the article points out. Recent trade woes have piqued interest in Precious Metals, but analyst Rhona O’Connell observes more than half of Silver consumption is from electronics manufacturing. Unlike Gold, a weakening economy could also lower industrial demand for Silver bullion. Demand for Silver coins and bars has similarly waned since 2013.
At 12:54 p.m. (ET), the APMEX Gold and Silver spot prices were:
- Gold, $1,400.70 Down $19.70
- Silver, $15.07 Down $0.31
- Platinum, $808.70 Down $32.90
- Palladium, $1,576.20 Down $1.60
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