Gold, Silver, and Stocks Edge Lower Following Non-Farm Payroll News
Last week, gold and silver posted weekly declines as the dollar and Treasury fields firmed following the latest round of U.S. inflation data. This week, investors remained focused on employment data to gauge the extent of the Fed's impending rate cuts. This week was shortened in terms of trading days, as major markets in the U.S. were closed in observance of the Labor Day Holiday.
The trading week started on Tuesday, with disappointing U.S. manufacturing data. The weaker-than-expected manufacturing news via ISM, rattled Wall Street investors as Tuesday marked the most significant daily downturn for U.S. equities in over a month. Most notably, the Dow Jones Industrial Average dropped 600 points before Tuesday’s close. Meanwhile, gold dipped to a one-week low of $2,489 while silver shed nearly 2% on its way to a closing price of $27.93.
Bullion rallied on Wednesday after it was revealed that U.S. job openings fell to their lowest in 3 ½ years. The weak employment data boosted the odds of a more aggressive, 0.50% interest rate cut this month. As a result, gold pared its weekly losses and ended the trading day near $2,496 while silver notched a modest daily uptick at $28.29. Stocks wobbled following the employment news, as most major averages ended the day in the red.
On Thursday, concerns over a weakening U.S. economy deepened, following data from paycheck company ADP which revealed that U.S. companies generated only 99,000 new jobs in August, when 140,000 had been forecasted by economists. Following the employment news, the Dow tumbled by 200 points, as investor focus shifted to non-farm payroll data set for release this morning.
The onslaught of weak jobs data prompted odds makers to increase the odds of a more aggressive 0.50% September rate cut to 50% from 41%, according to the CME FedWatch Tool. On Thursday, gold rose to a one-week peak of $2,517 as the prospect of more significant rate cuts is favorable to non-yielding bullion.
This morning, the labor department reported that non-farm payrolls rose by 142,000 in August, compared to estimates of 160,000. The same report also revealed that the U.S. unemployment rate stood at 4.2%, which was in line with expectations. The somewhat conflicting employment news prompted further debate regarding the odds of a 0.50% or 0.25% rate cut.
As a result, gold fell by over 1% from its near-record high achieved in the previous session. Following this morning’s downturn, gold is facing a modest 0.08% weekly loss at $2,494. As is often the case, silver made a more dramatic move percentage-wise, as the gray metal fell by 3.6% this afternoon. As this is written, silver is eying a 1.8% weekly loss at $27.91 an ounce.
Today’s employment news also pressured stocks to the downside, while a downturn in tech shares led to daily losses for major averages. Of the three major averages, the tech-heavy Nasdaq Composite faired the worst on a weekly basis, with a 5.2% decline. Meanwhile, the Dow and S&P 500 shed 2.3% and 3.5%, respectively.