Gold -0.3% for Week, Stocks -2.9% as US Jobs Data Hit Fed Rate-Cut Bets
Friday, 9/06/2024 15:45
The PRICE of GOLD fell in London today, dropping 0.3% for the week – and missing a new all-time weekend high in Dollar terms for the first Friday in four – after US jobs data came in weaker than expected but the jobless rate fell and average wage growth accelerated.
Betting spiked and then sank that the US Federal Reserve will slash its key interest rate by half-a-point at its September meeting the week after next.
Global stock markets meanwhile fell for the 5th day running, dropping to a new 17-session low on the MSCI World Index of developed-economy equities and trading 2.9% beneath last Friday's new all-time record high.
Initially spiking back up to $2529 per Troy ounce as the non-farm payrolls data was released, the price of gold then dropped and failed to hold above the $2520 mark for the 7th time in 2 weeks, fixing around $2508 per Troy ounce at 3pm in London – down $5 beneath
last Friday's record-high weekly finish for gold.
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The
UK price of gold in Pounds per ounce meantime lost 0.4% for the week at £1904, and the gold price in Euros slipped 0.3% to €2262.
"[Jobs] data indicate that the labor market is now roughly in balance and therefore unlikely to be a source of inflationary pressures going forward," said New York Fed president John Williams
in a speech immediately after today's non-farm payrolls figures were released by the Bureau of Labor Statistics.
"[So] with inflation moving toward the target and the economy in balance, the stance of monetary policy can be moved to a more a neutral setting over time," Williams told the Council on Foreign Relations, echoing Fed chairman Jerome Powell's Jackson Hole statement that "the time has come" for the US central bank to start cutting interest rates.
US non-farm payrolls expanded by 142,000 in August, the BLS said, missing consensus forecasts by more than 1/10th but improving from July's revised-down figure of 89,000 and led by hiring in construction and health care.
However, unemployment in the world's largest economy ticked 0.1 points lower to 4.2% of the work force – down by 0.1 points from July's near 3-year high – while annual wage growth rose to 3.8%, accelerating 0.2 points from July's 3-year low.
Trading in US interest-rate futures whipsawed on the non-farms jobs data, putting a 49% chance on the Fed cutting by half-a-point on 18th September from today's 2-decade highs before those odds dropped back to 37%.
"While the US NFP employment report confirmed the trend of a gradual weakening," says a note from French bank Natixis, "the markets are currently anticipating three cuts in the Fed Funds rate (including one of 50 basis points) before the end of the year...while we expect only two of 25 bps."
Longer-term interest rates fell, rose and then eased back after today's US jobs news, with 10-year US Treasury bond yields heading into the weekend at 3.72%, down almost 20 basis points from last Friday.
Two-year bond rates fell less steeply for the week, but dropping to 3.71% they still put the US yield curve back into positive territory, trading below longer-term rates after
snapping a record stretch of inverted yield curve recession warnings last week.
Silver also rose and then fell on the NFP jobs data, briefly rising through $29 per Troy ounce before dropping 50 cents and more late Friday afternoon in London's bullion market.
Industrial metal copper held little changed close to 6-month lows. Crude oil prices fell to new 2024 lows.
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