Precious Metals Review

“Gold prices extended losses on Friday after a U.S. jobs report trounced expectations and bolstered the case for a Federal Reserve interest rate hike in December, although the yellow metal remained on track for a weekly increase.

By 09:52 ET (14:52 GMT), spot gold had fallen by 1.1% to $4,043.78 an ounce. Gold futures for December delivery slipped by 1.5% to $4,052.30 an ounce. A firmer dollar also took some shine off gold because bullion is priced in the greenback.

The U.S. economy added far more jobs than anticipated in October, while the unemployment rate dipped, in a sign of a robust labor market that could bolster arguments for a Federal Reserve interest rate hike next month.

“The Federal Open Market Committee has the support from the job market to raise rates in December,” said Jeffrey Roach, Chief Economist at LPL Financial. Higher rates can weigh on gold by increasing the opportunity cost of holding the non-yielding asset.

Nonfarm payrolls jumped to 165,000, rising from an upwardly revised total of 60,000 in September and topping economists’ expectations of 65,000. Job gains increased in professional and business services, health care, transportation and warehousing, the Labor Department’s Bureau of Labor Statistics said in a statement on Friday.

Following the jobs report, markets continued to price in a roughly three-in-four probability of 25-basis-point rate hike by the Fed next month, according to CME FedWatch. Those chances had been dented on Thursday, when a deep stock-market rout rattled investors’ confidence in an artificial intelligence boom which has largely propped up U.S. growth.

But that selloff paused on Friday, as dip-buying buoyed chip stocks. The tech-heavy Nasdaq Composite and benchmark S&P 500 opened higher after the employment data, while the rate-sensitive 2-year Treasury yield and its 10-year benchmark counterpart rose. Yields tend to move inversely to bond prices.

Oil prices, meanwhile, were choppy but remained on pace for a steep weekly drop. Analysts have suggested that there has been a correlation between gold and crude, given the impact of an energy-price shock on interest rate expectations. Hopes have risen that Democrats will push Republican President Donald Trump to quickly end the Iran war, a prospect which could trigger a retreat in oil prices and potentially weaken the argument for Fed interest rate hikes.

Against this backdrop, crude prices have fallen sharply this week, underpinning a weekly advance in gold of more than 4%.”

“The precious metals trade caught a leg up after the Democrats swept both chambers of Congress on Wednesday amid improved investor confidence.

Gold prices surged past $4,000 an ounce, with spot gold gaining nearly 2% to trade at $4,137.49 at the time of writing. Meanwhile, spot silver prices were up 1.72% to trade at $53.11 an ounce.

Are Gold, Silver Still Worth Buying?

Many market experts believe that this is just the beginning for the precious metals trade, which is likely to edge higher in a Democratic-led Congress.

Economist Peter Schiff said in a post on X, “After being up over $130 today, gold is up another $55 tonight, trading above $4,100. It’s possible it may never trade below $4,000 again. Silver is up another 40 cents, trading above $52.50. It may never trade below $50 again. Just in case, buy both now.”

As per market commentator The Kobeissi Letter, gold and silver have added a combined value of over $1 trillion in market capitalization on Wednesday.

Economist Steve Hanke also backed buying the precious metals, noting the surge in prices of gold and silver in a post on X.

Ole Hansen, veteran commodities expert and Head of Commodity Strategy for Saxo Bank, said in a post on X that gold and silver have rallied, supported by a softer dollar and lower Treasury yields amid expectations that a Democrat-controlled Congress could constrain Trump’s fiscal agenda and limit further, increasingly unaffordable fiscal expansion.

Long-term Treasury yields eased late Wednesday, with the 10-year U.S. Treasury yield trading at 4.839%, while the 30-year yield was at 5.231%.”