Gold futures tallied a third straight gain on Wednesday, as an unexpected monthly fall in U.S. private-sector jobs, weakness in the dollar, and a further retreat in yields for government debt helped lift the precious metal to its highest settlement price in a week.
“While gold is likely to exploit the dollar’s weakness to push higher, its near-term outlook remains influenced by the U.S. jobs report on Friday,” said Lukman Otunuga, manager, market analysis at FXTM.
“A strong jobs report that shows robust job and wage growth may reinforce expectations of a hawkish [Federal Reserve], dragging gold prices lower as the dollar regains its mojo,” he told MarketWatch. However, “if the jobs report disappoints, this could offer some relief to gold bugs, resulting in an incline back towards $1,831.”
On Wednesday, gold got a boost after data showed privately run U.S. businesses reduced employment by 301,000 jobs in January –- the biggest drop since the start of the pandemic. Economists surveyed by The Wall Street Journal had forecast a 200,000 gain.
April gold GCJ22, +0.39% GC00, +0.39% rose $8.80, or 0.5%, to settle at $1,810.30 an ounce, following a 0.3% advance on Tuesday. Prices Wednesday marked the highest settlement for a most-active contract since Jan. 26, FactSet data show.
The move for gold comes as the 10-year Treasury note TMUBMUSD10Y, 1.772% yielded 1.56%, down by over 4 basis points from its levels Tuesday afternoon, while the dollar was down nearly 0.5%, as gauged by the ICE U.S. Dollar Index DXY, -0.48%, a gauge of the buck against a half-dozen other currencies.
“Gold is hovering right above $1,800 and there is meaningful safe haven interest with market volatility along with the Ukraine crisis to support this level,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch. “I do not see gold breaking out much higher, but rather having a measure of support at $1,750 on any pullback.”
Bullion has been buoyant so far in 2022 but the precious metal remains caught in a relatively tight range with $1.850 serving as an area of resistance, against the prospective of the Federal Reserve launching a regime of higher interest rates.
Read: Fed’s Daly, in exclusive MarketWatch interview – says ‘gradual’ rate hikes won’t derail the economy
“More definitive signs of economic weakness might curtail the Fed’s desire to check inflation,” Peter Grant, vice president and senior metals strategist at Zaner Metals and Tornado Bullion Solutions. “That would set a more favorable tone in gold above $1,800, returning focus to last week’s high at $1,853.78.”
However, “at this point, focus is on Friday’s jobs report,” he said. See economic calendar
Meanwhile, silver for March delivery SIH22, +0.40% SI00, +0.40% rose 11 cents, or 0.5%, to end at $22.707 an ounce, after rising 0.9% a day ago.
March copper HGH22, +1.14% tacked on 1.4% to $4.496 a pound. April platinum PLJ22, +1.51% rose 2% to $1,043.70 an ounce and March palladium PAH22, +0.94% settled at $2,369.50 an ounce, up 1%.