Rebound in Gold, Silver Fades as ISM Inflation Offsets Weakest NFP Jobs Data in 4 Years
Friday, 11/01/2024 14:59
The PRICE of GOLD rallied with global stock markets on Friday but trimmed its rebound from yesterday's steep loss as stronger US inflation data contradicted the weakest jobs growth in nearly 4 years ahead of Election 2024, confusing bond-market expectations for Federal Reserve interest-rate cuts.
Peaking at $2759 per Troy ounce – $30 below
Wednesday morning's fresh all-time spot-market gold high – the price of gold then dropped back to $2742, cutting its gain from last Friday's finish in London to 0.4% but setting the 3rd new week-end record in a row.
Silver bullion prices had earlier rallied with gold but then fell back through $33 per Troy ounce, erasing its rebound from 2-week lows, after the ISM manufacturing report said factory activity across the USA slowed yet again in October with inflationary pressure in prices paid hitting the worst since May.
Government debt prices also rose and then fell back with gold, silver and stocks, edging longer-term borrowing costs back up – but still below the multi-month highs of
Thursday's 'bond vigilante' attack – despite the Bureau of Labor Statistics saying total non-farm employment across the world's largest economy "was essentially unchanged in October", adding only 12,000 jobs on the BLS' first estimate.
Slowing from 223,000 in September and missing the Street's consensus forecast by 90%, that marked the weakest NFP payrolls growth since the sharp drop of December 2020, the month that the USA began mass vaccinations amid the Covid-19 pandemic.
"Despite Thursday's correction, gold remains in a strong uptrend with several positive factors aligned to drive further gains," Reuters quotes a bullion salesman in Singapore.
Gold rose by 4.0% in Dollar terms last month, slower than September's 6-month record of 4.6% but higher for the 4th month in a row despite the US Dollar adding 3.1% on the currency market, putting its trade-weighted DXY index at the highest month-end since July.
That matched gold's longest such run since the first half of 2016.
New York's S&P500 index meanwhile lost 0.9%, dividends included, its first monthly drop since April's 4.1% plunge.
Ten-year US Treasury bonds made a total returns loss of 3.6%, the worst month since September 2022.
"Gold is the ultimate risk-off asset," says asset-management giant State Street's gold strategist George Milling-Stanley.
"Gold basically
offers you protection against a whole succession of risk."
While equities fell and gold rose in October, investor confidence in corporate debt – as tracked by the gap between high-yield debt yields over US Treasury bond rates – improved for the 3rd month running, ending October with
the lowest spread since May 2007, eve of the global credit crunch and then financial crisis.
"I'm
not worried about the rise in gold prices, it's quite well underpinned," says UK money manager Sebastian Lyon of the £5.1 billion ($6.6bn, €6.1bn) Trojan Fund from Troy Asset Management.
"But I'd like to see gold consolidate at these levels rather than continue up to the $3000 level and beyond. I would get nervous if it ran up strongly from here."
The Trojan Fund holds 13.0% of its assets in gold-backed ETF trust-fund products – and the price of gold in UK Pounds has risen by 30.9% in 2024 so far.
Another 11.6% of the Troy Trojan fund sits in long-dated US and UK Treasury bonds, with a further 27.4% in shorter-term US and UK government debt.
All told, the fund has risen by 6.0% year-to-date.
Shanghai gold continued to show a discount to global bullion prices overnight Friday, suggesting
weak domestic gold demand vs. supply in China, the precious metal's No.1 consumer market.
Compared to this week's 0.4% gain in US Dollar quotes for London gold settlement,
the UK gold price in Pounds per ounce today showed a 0.7% rise from last Friday at £2116, and the Euro price edged 0.2% higher at €2527.
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