US Jobs Shock Sends Gold to New EUR and GBP Records
Friday, 1/10/2025 15:33
GOLD PRICES leapt on Friday, adding 1.4% for the week in Dollar terms and hitting fresh record highs in Euros and UK Pounds, as stronger-than-expected US jobs data sent world stock markets lower, drove the greenback up to new multi-year highs, and raised the cost of borrowing for governments everywhere.
Contrary to Wednesday's private-sector ADP Payrolls estimate, jobs growth in the world's largest economy leapt past analyst forecasts for December, beating consensus by 60% and pushing the unemployment rate down by 0.1 points from November's 3-year high of 4.2%.
Betting on US interest rates – already 'hawkish' after yesterday's minutes from the Federal Reserve's December rate cut said some officials wanted to pause – pushed back expectations for the next Fed rate cut from May to June
Global stock markets extended this week's drop, losing 0.9% from last Friday's finish on the MSCI World Index, and taking it back down to what was a new all-time high in September.
Yet despite boosting the Dollar's trade-weighted DXY currency index to a 26-month high, the US jobs estimate's initial smack to gold prices was quickly reversed, with spot bullion then leaping to 4-week highs above $2693 per Troy ounce.
That sent
gold priced in Euros surging to €2625 – higher by 0.6% than mid-November's post-US election record – while the UK gold price in Pounds per ounce hit £2200, almost 1/5th higher from 9 weeks ago and 5.6% higher for 2025 so far.
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Bond vigilantes are back because of consistently stronger-than-expected US economic data, [the fact] that inflation will be sticky, and [also] renewed focus on debt and deficits," says Mohamed El-Erian, chief economic adviser at German financial giant Allianz.
"The pressure on bond markets could persist, particularly in the UK, in the absence of corrective [budget] measures and/or if inflation remains persistent," says French investment bank Natixis, pointing to "the concomitant fall in Sterling in response to likely sales of UK bonds by foreign holders."
The UK's 30-year Gilt yield today rose through 5.50% per annum, the highest since 2008, as the Pound sank for the 4th session running to new 14-month lows against the rising Dollar.
Germany's 10-year Bund yield meanwhile hit 2.57% per annum – the highest borrowing cost for Berlin since July and 0.4 points higher from this time last year – as the Euro dropped within 2.5 cents of parity, its lowest Dollar exchange rate since November 2022.
With 1 week until Donald Trump returns to the White House, Washington's 10-year borrowing costs hit 14-month highs above 4.70% per annum after the December non-farm payrolls report.
Tokyo's 10-year rates rose to 2011 levels above 1.20% per annum on Japanese government bonds, and Beijing's government borrowing costs also rose, with China's 30-year bond yields adding 0.1 percentage points from the New Year's fresh record low of 1.80% per annum.
Shanghai's CSI300 share index meantime fell hard, down 1.3% for the day to its lowest since
the Communist government promised economic stimulus in late-September to try stalling the world No.2 economy's slowdown in growth.
Today's move put the CSI300 back at a level first reached in the spring of 2007.
Industrial commodities rose again in contrast, taking Brent crude to 3-month highs above $80 per barrel as London copper broke above $9,000 per tonne for the first time since November.
Semi-industrial precious metal silver also outpaced gold's gain for the week, adding 2.6% in Dollar terms after hitting a 3.5-week high of $30.60 per Troy ounce following the US jobs news.
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