Gold News

Gold's Best Friday Finish Since June Defies US Fed and Lowest Jobless Rate in 53 Years

GOLD, SILVER, bonds and the stock market defied new data showing a 5-decade low in US unemployment on Friday, rising alongside the Dollar and jumping sharply for non-US investors.
New York equity futures pointed higher and 10-year Treasury yields slipped to 3.70% – the lowest since before Christmas – as bond prices rose after today's non-farm payrolls data for December put the US jobless rate down at 3.5%, matching the world No.1 economy's pre-Covid level of late 2019 at the lowest since 1969.
But while last month's net hiring beat analysts forecasts by more than 11% at 223,000 it was still the slowest jobs growth since December 2020 on the Bureau of Labor Statistics' first estimate.
Gold jumped above $1850 per ounce, heading for its highest Friday finish since June in Dollar terms at $1848 and rebounding $25 from yesterday's low, hit after the Federal Reserve said it has zero plans to cut interest rates in 2023 and restated its commitment to higher rates for longer to defeat inflation.
Chart of gold priced in Dollars, Sterling and Euros, rebased to 100 = New Year 2020. Source: BullionVault
The cost of living across the 19-nation Eurozone slipped 0.3% last month from November, flash figures from Eurostat said earlier on Friday, pulling headline inflation down to 9.2% per year.
But 'core' inflation excluding fuel and food accelerated to 5.2% while December's Eurozone retail sales also beat analyst forecasts.
Gold priced in Euros touched €1757, a fresh 4.5-month high, while the EuroStoxx 600 index of region-wide shares extended its New Year 2023 gains to 3.9%.
The UK gold price in Pounds per ounce meantime rose above £1550, coming within 2% of its all-time highs and trading barely £10 per ounce below its record Friday finish in London of August 2020.
"Gold prices are forecast to begin easing notably further into the year," says independent consultancy Metals Focus in its new 2023 outlook, "as real [interest] rates rise, the US Dollar holds on to most of its recent gains, the attractions of rival assets build and physical markets, including central banks, disappoint."
Real US rates today slipped to 1.43% as implied by 10-year TIPS bonds, down 0.3 percentage points from November's 13-year high but still 2.3 points higher from New Year 2022 after the steepest annual jump since those inflation-protected securities were launched in 2003.
Like gold prices, silver also popped on today's US jobs data but its rebound was less marked, leaving the more industrially-useful precious metal with a 30 cent loss for the first week of 2023 at $23.61 per ounce.
"[While] silver prices are expected to fall in tandem [with gold]," says Metals Focus' new outlook, "its robust fundamentals and a recovery in industrial metals should rule out any real widening in the gold:silver ratio."
That ratio, simply dividing the gold price by the silver price to track their relative values, hit 95 in September – a historic high if not for the Covid Crash in useful commodities of early 2020 – before falling towards 1-year lows at 75 last week.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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