Gold futures settled Thursday at their lowest level since mid-March as Treasury yields climbed on data showing strength in U.S. private-sector employment and in the service sector.
The upbeat economic data raised the likelihood of further interest-rate hikes by the Federal Reserve to help calm inflation.
Price action
-
Gold futures for August delivery
GC00,
+1.00% GCQ23,
+1.00%
declined by $11.70, or 0.6%, to settle at $1,915.40 per ounce on Comex. That was the lowest most-active contract finish since March 14, according to Dow Jones Market Data. -
Silver futures for September delivery
SI00,
+1.73% SIU23,
+1.73%
fell by 51 cents, or 2.2%, to $22.89 per ounce. -
Palladium futures for September
PAU23,
+0.53%
lost $18.50, or 1.5%, to $1,239.40 per ounce, while platinum futures for October
PLV23,
+0.95%
shed $15.30, or nearly 1.7%, to $909.70 per ounce. -
Copper futures for September delivery
HGU23,
+1.18%
fell by 3 cents, or 0.9%, to $3.7345 per pound.
Market drivers
The gold market’s monthly runaround on U.S. jobs data has started early with Thursday’s blowout ADP private-sector jobs estimate for June, said Adrian Ash, director of research at BullionVault.
The U.S. private sector added 497,000 jobs in June, the biggest increase since July 2022. Economists polled by the Wall Street Journal had forecast a gain of 220,000 private-sector jobs.
Separately, the Institute of Supply Management’s barometer of business conditions at service-sector companies rose to 53.9% in June from 50.3 in the prior month. Economists polled by the Wall Street Journal had expected the index to rise to 51.3%.
Together with the ADP data and the hawkish tone of the latest Federal Reserve meeting notes, Friday’s official nonfarm payrolls data “could put another test of the $1,900 floor in play” when they’re released Friday, Ash told MarketWatch.
Minutes from the Fed’s policy meeting, released Wednesday, showed that senior Fed officials support more interest-rate hikes later this year.
A “hot ADP report and impressive ISM services report” raised the odds the Fed might have to deliver more rate hikes beyond the July Federal Open Market Committee meeting, said Edward Moya, senior market analyst at Oanda, in emailed commentary.
Rising rates can diminish the appetite for assets like gold because the commodity doesn’t offer a yield, compared with the perceived safety of other assets like government bonds. Higher U.S. interest rates can also boost the dollar and dull demand for dollar-denominated commodities.
In Thursday dealings, the ICE U.S. Dollar Index
DXY,
a gauge of the currency’s strength, was down 0.2% at 103.18, but the yield on the 10-year Treasury note
TMUBMUSD10Y,
was up 4.05%, from 3.94% Wednesday afternoon.
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