Gold and Silver Plummet Following Payroll Jump


Last week, gold saw little change and silver achieved a modest gain amid mixed feelings from investors regarding rate cut odds. This week, bullion prices were again driven by rate cut bets in the wake of employment data that was released on Monday, Wednesday, and Friday. 

On Monday, investors were greeted with weak U.S. manufacturing and construction data. Contractions in the manufacturing sector increased rate cut odds which, in turn, pressured Treasury yields and the dollar index to the downside. As a result, the 10-year Treasury yield slid, marking its biggest single-day decline of the year. These developments provided upward momentum for bullion, as gold jumped 1% to a closing price of $2,349. 

Stocks surged on Tuesday, following the release of disappointing employment data which revealed that U.S. job openings plummeted to 8.1 million in April, marking a three-year low for that index. Per the CME FedWatch Tool, the weaker jobs data increased the odds of a September rate cut to nearly 60%.

Rate cut odds increased again on Wednesday, following yet another round of weaker-than-expected employment data. The news came from paycheck company ADP and revealed that U.S. employers added 152,000 jobs in May, which marked the smallest increase in 2024. Rate cut optimism propelled the Nasdaq Composite and S&P 500 to fresh record closes on Wednesday. Meanwhile, gold ended Wednesday’s trading at $2,366 for a 1.2% daily gain, while silver jumped 2.4% to a closing price of $30.42. 

On Thursday, gold firmed as tailwinds emerged in rate cut optimism, dollar losses, and extended declines in Treasury yields. On the same day, the European Central Bank (ECB), announced that it would cut interest rates to 3.75% from 4%. This marked the first rate cut by the ECB in five years. Following this news, gold jumped 0.7% on its way to $2,382 an ounce. Meanwhile, silver ended Thursday’s trading at $31.31 for a 2.9% daily uptick. 

This morning, gold and silver were again driven by employment data, this time to the downside. Earlier today, Nonfarm payroll data from the Labor Department revealed that payrolls rose by 272,000 in May, when an increase of 185,000 was forecasted by economists. This news diminished rate cut hopes and pressured bullion to the downside. 

By the end of today’s trading, gold plummeted by 4%, and would end the week 1.4% lower, at $2,289. At the same time, silver fell by 7% today, marking nearly a 4% weekly decline at $29.17. The uptick in payrolls also pressured U.S. equities this morning, but major averages still managed to end the week in the green. After reaching fresh all-time highs earlier in the week, the Nasdaq Composite and S&P 500 notched 1.6% and 0.9% weekly gains, while the Dow Jones Industrial Average eked out a 0.23% weekly uptick.

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