Background on the U.S. Jobs Report and Its Impact
The United States released its non-agricultural jobs report for May, which showed an increase of 139,000 positions. This figure surpassed the expected 130,000 job additions, as estimated by economists surveyed by Reuters. The unemployment rate in the U.S. remained steady at 4.2%, aligning with predictions.
Implications for Gold Prices
Gold prices fell by over 1% on Friday following the better-than-expected jobs report. This development reduced expectations for an imminent interest rate cut by the Federal Reserve (Fed) this year. The report suggests that the Fed will maintain its pause in rate adjustments for some time, with only one more cut anticipated by December. Consequently, spot gold dipped 1.1% to $1,316.13 per ounce but still managed a weekly gain of 0.8%. Meanwhile, U.S. gold futures closed down by 0.8% at $1,346.60 per ounce, still up 0.39% for the week.
Gold is traditionally viewed as a hedge against inflation and geopolitical uncertainty. However, rising interest rates diminish the appeal of gold since it does not produce income. Edward Meir, an analyst at Marex, explained that the jobs report’s alignment with expectations negatively impacts gold prices as it implies a Fed rate pause.
Silver Price Surge
In contrast, silver prices soared to their highest level since 2012 after the jobs report. Spot silver fell 0.5% to $17.96 per ounce but still gained 9.42% for the week.
Trade Tensions and Their Effect on Metal Prices
The recent telephone call between U.S. President Donald Trump and Chinese leader Xi Jinping offered little clarity regarding trade negotiations. Meir noted that difficult trade talks would not be resolved over the phone, and any negative developments in tariff disputes could benefit gold prices.
Copper Prices Decline
Copper prices fell on Friday due to a strengthening U.S. dollar and a weakening Chinese yuan. Continuous drawdowns from London Metal Exchange (LME) warehouses and concerns about short-term supply further limited losses. The copper three-month contract on the LME dropped 0.5% to $9,686.5 per tonne.
Copper, used in energy and construction sectors, reached $9,809.5 per tonne on Thursday—its highest in over two months—following hopes of a trade tension easing between the U.S. and China after Trump and Xi’s phone call.
Despite the weekly 3.65% gain, copper and other growth-dependent metals faced pressure from the dollar’s appreciation following better-than-expected U.S. employment data and unresolved key issues between Washington and Beijing.
Key Questions and Answers
- What was the U.S. non-agricultural jobs report for May? The report indicated an increase of 139,000 jobs in May, surpassing the expected 130,000 additions.
- How did the jobs report affect gold prices? The better-than-expected report reduced expectations for a Fed interest rate cut, negatively impacting gold prices.
- What happened to silver prices following the jobs report? Silver prices surged to their highest level since 2012, gaining 9.42% for the week.
- How did trade tensions influence metal prices? The recent phone call between Trump and Xi offered little clarity on trade negotiations, but any negative developments could benefit gold prices.
- Why did copper prices decline despite initial gains? Copper prices fell due to a strengthening U.S. dollar, weakening Chinese yuan, and continuous warehouse drawdowns at the LME.
