Gold and Silver Hold Ground Amid Mixed Jobs Data

APMEX

2/4/2022 11:18:42 AM

Wall Street momentum continued on Monday, as major indices continued a two-day rally, but faced a monthly downturn. The S&P 500 and Nasdaq ended January down 5.1% and 8.8% respectively. January 2022 was the worst month for U.S. stocks since March of 2020, as the reality of a more hawkish Fed set in. 

Gold fell last week, as the metal was pressured by the forecasted five interest rate hikes for 2022, compared to the original estimate of three to four. This boosted the dollar and resulted in a weekly downturn for precious metals. Gold started the trading week near $1,789, while silver was near $22.40. 

Tuesday saw the third consecutive day of stock market gains as companies such as Alphabet Inc. posted strong earnings. On the same day, Bitcoin jumped 4.5% to around $38,755. 

So far Bitcoin is down by over 22% year to date, while the second-largest cryptocurrency, Ethereum, is down by nearly 26%. Crypto woes have followed declines in other risky assets, as the prospect of higher interest rates loom. This, along with the Biden administration’s threats to crackdown on crypto trading have accelerated crypto losses in 2022.

Silver saw its weekly high of $22.99 on Tuesday, as investors anticipated Wednesday’s ADP employment report. Meanwhile, gold was trading around $1,804 an ounce. Wednesday’s employment data showed that private payrolls actually decreased by 301,000 in January, when a gain of 200,000 was forecasted. 

Investors seemingly took the abysmal payroll data in stride, as stocks finished in the green once again on Wednesday. Tech stocks provided the much-needed momentum for the S&P 500 and Nasdaq, as positive earnings data boosted Wall Street sentiment. Gold held steady following the jobs data and would touch its weekly peak of $1,810.

Gold’s three-day winning streak came to an end on Thursday while the benchmark 10-year Treasury yield and dollar index jumped. Initially gold fell to around $1,791, while silver dropped to three-week lows just above the $22 mark. However, bullion losses would be limited, as gold rose to $1,805 and silver passed $22.50 late Thursday.

 
The four-day stock market rally concluded on Thursday, as Facebook’s parent company Meta, shed over 25%. This was the largest ever one-day drop, for any one company in the history of the U.S. stock market. In terms of dollars, Meta lost almost $240 billion. Following this, the Nasdaq composite fell by 3.5% while the S&P 500 dipped by 2.3%. 

For some, Wednesday’s weak employment data was a signal that Friday’s Non-farm payrolls may also miss expectations. This turned out not to be true. The Labor Department reported that 467,000 jobs were added, against the forecasted number of 125,000. 

Following the payroll news, gold dipped by about 1%. However, the yellow metal pared losses and is currently around $1,808. After this morning’s payroll surprise, silver followed a similar path with an initial dip of 1.9%. Silver has since gained ground and is hovering near $22.54 an ounce, which is barely higher for the week. Currently, gold is looking at a modest weekly gain of 1.1%.