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Gold Up On Weak ADP Jobs

Wednesday, June 5, 2019

 

Gold prices are marching on, rising to over a three-month high this morning as trade concerns continue to feed safe-haven demand along with the support received from Fed Chair Jerome Powell’s remarks on Tuesday indicating he is open to cutting interest rates in response to the trade conflicts.

Within the past hour, the yellow metal leapt again with the release of latest report from private payrolls company ADP which showed 27,000 jobs created in May, far off the forecasts of 185,000 new jobs. Gold reacted quite positively to this news, boosting August gold futures up more than 1% on the day.

Prices for of the yellow metal have climbed in recent weeks as investors sought a safe haven to sit out a potential global trade war. But Tuesday, China’s commerce ministry urged the use of dialogue and negotiation to resolve the dispute. Meanwhile, Senate Republicans threatened to oppose President Donald Trump’s proposed tariffs against Mexico.

The Fed will respond to the risks posed by a global trade war “as appropriate to sustain the expansion,” Powell said at a speech in Chicago. Rate cuts typically cause gold to rise, and prices spiked immediately after the comments.

Equities also rallied on Powell’s remarks while the Dollar Index has weakened. The Standard & Poor’s 500 Index and the Dow Jones Industrial Average each climbed 2.1% and are set to rise at the opening bell this morning, but that rise has been tempered by the jobs report.

Gold futures posted their fifth consecutive advance Tuesday with the August futures on Comex currently sitting at $1,346, up over $18 from yesterday.

The price of silver fell last month to its lowest relative to gold in more than 26 years, The Wall Street Journal reported. That’s a sign of slowing global growth to analysts who use the relationship between the two metals to gauge momentum in the global economy, it said.

Spot palladium increased 1.3% Tuesday, but has dropped a bit this morning, resting at $1,352 an ounce. Spot platinum, which is sensitive to the growth of the Chinese automotive industry, dropped 0.3% on Tuesday, but has regained some of that territory this morning, sitting at $829 an ounce at the time of this report.

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