Jobs Data Pressure Gold and Silver Downward

APMEX

8/6/2021 12:57:16 PM

Jobs Data Pressure Gold & Silver Downward

Gold and silver prices remained relatively flat throughout the majority of this week, saving significant price movements for Friday. On Wall Street, the mood was cautiously optimistic as the week began. Positive earnings data, whispers regarding an infrastructure deal, and signs of a continuation of central bank stimulus, all pushed stocks higher, as markets opened Monday. However, rising cases of the Delta COVID-19 variant would weigh on investor sentiment.

Meanwhile, the dollar and yields both saw declines on Monday. Gold and silver prices remained relatively unchanged. Gold started the week near $1,815, while silver was at $25.51 an ounce. Investors looked to jobs data that was set to be released later in the week, as the most significant scheduled economic events.

On Tuesday metals prices were little changed, with gold touching a daily high of $1,819. Silver was steady, around $25.55 an ounce as the day ended. U.S. equities were mostly higher on Tuesday, as the S&P 500 set yet another record closing high.

The first round of employment data via the ADP private sector jobs report was released on Wednesday morning. The numbers here were disappointing to say the least. The ADP employment data showed that only 330,000 private sector jobs were added in July. This fell short of the more than 650,000 that was forecasted.

As the dismal jobs data was released, stocks, bond yields, and the dollar all saw declines. The Dow fell more than 300 points while the dollar declined to its weekly low on Wednesday. On the other hand, gold and silver prices both saw weekly their weekly peak on the same day. Gold would reach a high of $1,831, while silver touched $25.97, as investor sentiment lent favor to less-risky assets. Investors would continue to anticipate the Nonfarm payroll and unemployment data, scheduled for release on Friday.

On the international front, The Bank of England and the Royal Bank of New Zealand both announced monetary policy decisions this week.  On Thursday, the Bank of England announced that rates would remain near 0.1% and that stimulus would continue in the near term, despite higher inflation forecasts.

In the U.S., Fed tapering talks re-surfaced after Fed Vice Chair Richard Clarida stated that rate hikes could occur in 2022 and a reduction in asset purchases could occur this year. Tapering talks were somewhat validated this morning, as a more positive jobs report revealed a rise in Nonfarm payrolls to 943,000, exceeding the forecasted 870,000.

Following the jobs data, yields and the dollar both rose, while the S&P 500 reached a record intraday high. All of this would weigh on gold and silver prices, as both would see weekly lows before Friday’s close. Gold dipped 2%, as it hovered near one-month lows. As this is written, gold is at $1,764 an ounce. Silver also slipped by more than 3% to around $24.50. This would mean a weekly silver decline of almost 4%.