Gold News

Gold & Silver Whip on US Non-Farms Jobs Data as Unemployment Sinks, Participation Hits 35-Year Low

GOLD and SILVER whipped hard on the release of US jobs data Friday, dropping 0.8% and 1.1% respectively as the official Non-Farm Payrolls report for April shocked traders with the strongest rise in four years.
 
Both gold and silver then reversed all their drop, cutting the week's losses to 1.5% at $1284 and 2.8% at $19.15 per ounce.
 
Non-farm US payrolls added 288,000 net jobs in April, the Bureau of Labor Statistics said, way above analysts' consensus forecasts of 220,000.
 
With gold and silver prices bouncing at $1275 and $19.02 per ounce respectively, traders picking through the NFP jobs data found unemployment falling by 733,000 – the greatest drop since 1949.
 
But overall, some 806,000 people dropped out of the labor force altogether, dragging the US participation rate to a 35-year low beneath 63%.
 
Spot gold's price spike down took it to a 1-week low. Silver spiked to only a 7-hour low in contrast.
 
But while gold then rallied to trade 6.5% higher for 2014 to date, silver has now slipped 2.0% from New Year's Eve.
 
Friday's New York opening saw US equity futures cut earlier gains after the jobs data.
 
Gold priced in Euros cut the week's earlier 2.2% losses, rallying to €929 per ounce as the single currency fell hard versus the Dollar.
 
With the US Federal Reserve this week holding rates at 0% yet again while trimming its monthly quantitative easing to $45 billion, "Of all the factors that could potentially move the [US Fed's] extremely slow tightening path" for interest rates, wrote Societe Generale's US economists ahead of the jobs report, "don't underestimate the headline unemployment rate." 
 
On SocGen's analysis, the falling jobless rate points to "faster wage growth [and] means a re-pricing of rate expectations."
 
But falling to a 5-5-year low of 6.3% however on Friday's jobs data, the US unemployment rate saw headline wages flatline in April from March, cutting the annual rise to 1.9%.
 
"For gold," Reuters this morning quoted Macquarie Bank's precious metals analyst Matthew Turner, "the salience of the non-farm payrolls is somewhat reduced by the Fed seemingly being on auto pilot with regards to its tapering activity."
 
Wholesale gold and silver bullion markets were meantime closed in China on Friday for the May Day holidays.
 
Many Hindus in former world No.1 gold consumer India today celebrated Akshaya Tritiya, promoted over the last decade as an "auspicious" time to buy gold and becoming the nation's second-heaviest spree after Diwali.
 
"We expect sales to be around 20% higher than last year," the Khaleej Times quotes one New Delhi dealer.
 
But "there has been a lull due to the [national and prime ministerial] polls," says another retailer, regional jewelry store head Siraj P.K. of Malabar Gold in Hyderabad, also pointing to the ongoing ballot's restrictions on citizens carrying large sums of cash to beat election fraud.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum 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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