Mixed reactions to the latest employment data contained in the nonfarm payrolls (NFP) report this morning helped boost the precious metals as the dollar slipped lower. Spot gold traded above $1,273/oz when markets in New York opened this morning, while spot silver was up 10¢ per ounce to $17.37/oz.
Platinum and palladium both were higher. However, the dollar tumbled 0.3% on the DXY index, falling as low as 96.8 this morning. The weaker dollar is providing much of the support for higher precious metal prices.
The headline number from the monthly NFP was a disappointing 138,000 jobs added, which was well below consensus expectations. Moreover, the payroll numbers for April and March were both revised lower, according to the Labor Department.
Wage growth also disappointed, which may be a sign that inflation is not picking up as fast as expected. Muted inflation is a negative development for gold, and may also be a reason for the Federal Reserve to be more hesitant with its path of interest-rate hikes. It's worth noting that the data on wages may be influenced by a quirk in how it is collected: the middle of the month (when many people who get paid every two weeks get their paychecks) fell on a Monday after the survey week, which may have skewed the numbers.
The overall economic picture painted by the report was decidedly mixed, however. Factory activity was up during May—a good sign for U.S. manufacturing—while private employers hired far more than had been forecast, with 253,000 jobs added. (This is only an estimate from ADP and Moody's, however, and may not be set in stone.) At any rate, this somewhat dampened the blow from the disappointing NFP. The unemployment rate continued to drop, though more people who stopped looking for a job (and are thus no longer considered "unemployed") plays a role in that trend.
Overall, stocks responded with vigor to the payrolls report. All three U.S. indices were in positive territory early this morning, while equities in Europe and Asia were higher across the board on Friday. Nonetheless, demand for Treasurys continued to be strong in reaction to the employment data, pushing the 10-year yield all the way down to 2.17%.
Expect some volatility today before traders head home for the weekend due to yesterday's announcement by President Trump that the U.S. would be abandoning the Paris Agreement on climate change. The president claims he will attempt to negotiate a better deal rather than leaving the process entirely. While the exact implications of this decision won't be felt immediately, it could loom large down the road. If nothing else, the move fulfills one of Trump's campaign promises to secure better international deals.
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