Gold Steady After Strong Jobs Report | July 6, 2018
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Gold Steady After Strong Jobs Report

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Gold Steady After Strong Jobs Report

Market activity was fairly subdued Friday following better-than-expected nonfarm payrolls data.

The precious metals saw very little action. Spot gold was off slightly to $1,255/oz. Spot silver also held about unchanged at $16.01/oz.

In the meantime, platinum and palladium each lost roughly 0.35%.

NFP Beat Expectations

The much-anticipated nonfarm payrolls (NFP) did not disappoint investors Friday morning.

According to the latest government data, 213,000 jobs were added in the private sector during June. This exceeded consensus expectations. Data for April and May were revised higher, as well.

The labor participation rate ticked higher, but so did the unemployment rate (4.0%), interestingly enough.

The same report from the Bureau of Labor Statistics (BLS) showed wages also nudging higher. Year-on-year wage growth registered at 2.7%.

U.S. stocks recovered from earlier losses thanks to the strong jobs numbers. Wall St looked to build on Thursday's strong post-holiday performance.

Asian indices also rose overnight. The Shanghai Composite advanced 0.7% while stocks rallied as much as 1.1% in Japan. However, European equities were about 0.2% in the red on Friday morning.

The other big news this week was the June FOMC meeting minutes released yesterday. While there were no major surprises in the minutes, some members of the Fed committee expressed concern about inflation and the potential for "financial imbalances."

As closely as the Fed is watched by domestic investors and traders, the impact of its current path of tightening policy may be felt even more acutely overseas, particularly in emerging markets.

Trade War Kicks Off

It's been talked about ad nauseum for months, but the "trade war" between the U.S. and China truly commenced last night.

Each side's proposal to impose tariffs on $34 billion worth of goods went into effect at midnight.

Even though by most measures this first shot across the bow over trade is comparatively a drop in the bucket, the stakes are undeniably rising. If the two countries can't come to some agreement over the dispute, President Trump has threatened to expand the scope of the U.S. tariffs to $500 billion. This total represents virtually all trade between China and America.

Nonetheless, the U.S. trade deficit is actually at its lowest in more than a year and a half. The trade shortfall narrowed 6.6% during May.

Increased oil output from OPEC may be impacting the energy markets. Crude oil prices fell Friday, with Brent crude losing 0.9% (-67¢) to $76.70/bbl and WTI crude giving up 0.7% (-50¢) to $72.40/bbl. In Shanghai, the nearest-dated crude contract traded at $73.90/bbl.

Precious metal futures slipped modestly lower. Copper continued its slide, slumping 0.9% to just $2.80/lb. Gold held onto its slight premium in Shanghai, trading at $40.56 per gram, or $1,261.52/oz.

Global bonds rose slightly Friday. The 10-year T-note yield was down to 2.82%, but the spread with the 2-year Treasury yield was at an alarmingly low 28 basis points.

The greenback also sank to close out the week, declining by 0.4% to 94.0 on the dollar index. This especially helped the euro, which added 0.6% to $1.176.

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.

About the Author

Everett Millman

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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