Nonfarm Payrolls Sink Gold Price | September 7, 2018
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Nonfarm Payrolls Sink Gold Price

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Nonfarm Payrolls Sink Gold Price

The spot gold market was up to about $1,202 per ounce earlier this morning but sank in response to better-than-expected nonfarm employment numbers. Gold lost 0.4% to $1,195/oz immediately following the report from the Department of Labor.

Spot silver was barely below unchanged, losing 2¢ (-0.1%) to trade at $14.12/oz

Palladium actually gained 0.6% as it approached $980/oz.

Among all the metals, platinum was the worst performer, sinking 1.9% (-$15) to about $775/oz.

Markets Down Despite NFP Beat

Last month's nonfarm payrolls came in well above expectations. More than 200,000 new jobs were added.


Given yesterday's miss for the ADP payrolls data, the discrepancy suggests that a significant portion of the hiring occurred in the public sector.

The same report from the Labor Department indicated that wage growth accelerated to a nine-year high. Average wages rose 0.4% from the previous month and were up 2.9% year-on-year, the fastest pace since June 2009.

Most interpreted the data as another sign of a healthy labor market. A shortage of qualified skilled workers in many industries is likely what's driving hourly compensation higher.

The U.S. dollar index was up about 0.25% to 95.25, yet Wall St dipped about 0.4% into the red at Friday's opening bell.

Britain's pound sterling was largely steady at $1.295 but the euro stumbled 0.45% lower.

There was a slump in tech stocks this morning, especially among microchip manufacturers.

Meanwhile, shares of electric automaker Tesla also tumbled to their lowest in about five months.

The trade war with China was cited as one of the main culprits in the downturn for the tech sector, which relies heavily on cheap Chinese manufacturing.

Investors Can't Ignore Uncertainty

Although there is little optimism that these trade tensions with China will abate in the near future, many business owners are hoping that there is at least no further escalation in the standoff.

Treasury yields hit a one-month high. The 10-year note saw its yield jump seven basis points to 2.94%. This widened the spread with the 2-year bond, but the difference between the two yields is still just 24 bp.

While much of the recent economic data—rising wages, low unemployment, and a pick-up in inflation—points toward the inevitability of more rate hikes from the Fed, the narrowing (or "flattening") yield curve should remain a cause of concern for the central bank.

© Jan Miks | 123rf.com


Markets are also concerned that there may be another government shutdown in the U.S. right around the midterm elections in November.

Across the Atlantic, stocks were off modestly in Europe. The stronger pound sterling dragged London's FTSE 100 lower by 0.95%.

Although European markets have been struggling of late, there are encouraging signs that Italy's new government will pursue more conventional economic policies in cooperation with the EU.

Worldwide, stocks are closing in on their worst week since March.

Shares in Shanghai closed higher and the Hang Seng index was flat. Tokyo's Nikkei 225 ended 0.8% in negative territory.

Commodities took a hit from the miniature rally for the dollar. Crude oil prices in Shanghai were down to 496.8 yuan per barrel, equal to $72.57/bbl. Gold futures in the country dipped to 264.7 yuan per gram (about $1,202 per ounce).

The Brent crude benchmark shed roughly 30¢ (-0.4%) to $76.20/bbl. WTI fell farther, losing 0.9% to $67.15/bbl.



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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