A slight correction lower and profit-taking by traders hit the gold market on Friday morning. This sent the gold price down about 0.25% to $1,178/oz after the yellow metal moved above $1,180/oz the previous day. The announcement of the non-farm payrolls for December by the U.S. Labor Department came in below expectations but did not lift the precious metals.
Spot silver meanwhile lost roughly 10¢ (-0.5%) to slip back below $16.50/oz.
In terms of the Platinum Group Metals, palladium was actually a gainer while platinum followed gold and silver lower, dropping 0.2% to about $965/oz.
Rising Wages Weigh on Metals
The last non-farm payrolls report for 2016 sent mixed messages to the markets—or Wall St reacted in mixed ways, at least. The headline number of 156,000 jobs added was lower than had been expected, but this disappointment was tempered by the fact that the report showed the strongest wage growth for American workers since 2009. Factory payrolls also rose after a decline in November.
This means that compensation saw its biggest uptick during the current period of economic expansion, growing 2.9% year-on-year. In November, wage growth was 2.5%. It also marked the sixth consecutive year that the job market has added at least 2 million positions. When the labor market is nearing full employment, worker scarcity tends to drive wages higher. Still, the Labor Participation Rate (the share of the working-age population that is currently employed) ticked up 0.1% to just 62.7%.
Trade Gap Widens
In terms of international trade, data released by the Commerce Department showed that the U.S. trade deficit widened again in November. The shortfall in the trade balance was 6.8% higher, the biggest rise in nine months. The trade deficit (not the national deficit, or current account balance) came in at $45.2 billion for the month due to a slight drop in exports and an increase in imports of more than 1%. The decrease in U.S. exports is partly attributable to the relative strength of the U.S. dollar to its peer currencies of late, while greater imports of petroleum drove this measure higher.
The total U.S. trade deficit is nearly $500 billion, but the data show that the imbalance decreased with certain individual countries like China and Mexico. However, the deficit with the EU rose sharply.
While auto exports from the U.S. were down, the country actually set an annual record for automobile sales in 2016, albeit by a narrow margin. Considering palladium is a key component in exhaust systems, the metal's 2% rise to about $750/oz on Friday is a continuation of ten-month uptrend in the palladium price. It touched levels as low as $470/oz in January and February.
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.