Precious Metals Review

“Nonfarm payrolls jumped by 4.8 million in June and the unemployment rate fell to 11.1% as the U.S. continued its reopening from the coronavirus pandemic, the Labor Department said Thursday.

Economists surveyed by Dow Jones had been expecting a 2.9 million increase and a jobless rate of 12.4%. The report was released a day earlier than usual due to the July Fourth U.S. holiday.

The jobs growth marked a big leap from the 2.7 million in May, which was revised up by 190,000. The June total is easily the largest single-month gain in U.S. history. The numbers capture the move by all 50 states to get activity moving again after the virus seized up much of the U.S., particularly service-related industries.

However, because the government survey comes from the middle of the month, it does not account for the suspension or rollbacks in regions hit by a resurgence in coronavirus cases.

Leisure and hospitality again accounted for the biggest jump, as the sector saw a 2.1 million gain, accounting for about 40% of the total growth. Another big contributor to the decline of the jobless rate was a plunge in those on temporary layoff. That total fell by 4.8 million in June to 10.6 million after a decrease of 2.7 million in May. The short-term jobless level fell by 1 million to 2.8 million.

The labor force participation level saw a sharp bump, rising to 61.5%, which brings it to 1.9 percentage points below its February level, a month before the coronavirus pandemic shut down much of the U.S. economy.

Jobs were equally balanced at 2.4 million apiece for full- and part-time workers.

Retail also saw a sizable boost, with a gain of 740,000. Education and health services  rose 568,000 and manufacturing was up 356,000. Personal and laundry services saw another major gain, at 264,000, part of an increase in other services that totaled 357,000.

The headline unemployment rate was understated slightly due to counting errors at the Bureau of Labor Statistics. Workers who still have jobs but have not been working are being counted as employed and even though they are supposed to be considered unemployed under BLS rules.

However, the BLS said that discrepancy “declined considerably” in June, making the actual unemployment rate only about 1 percentage point higher than the reported level.

An alternative measure of unemployment that includes discouraged workers and the underemployed fell to 18% from 21.2%.”

“Silver gains nearly 32% in the second quarter

Gold futures topped $1,800 an ounce on Tuesday to tally their highest finish since 2011, as uncertainty created by the coronavirus pandemic fed the metal’s appeal as a haven investment.

“Gold is one of the only major asset classes to have a positive [year-to-date] return,” said Jeff Klearman, portfolio manager at GraniteShares, which offers the GraniteShares Gold Trust BAR, +0.51%. “The demand destruction wreaked upon the U.S. and global economies and then the resulting unprecedented monetary and fiscal stimulus response here and abroad is the primary driving force behind gold performance this year.”

Rising numbers of new cases of COVID-19 in Florida, Texas, California and Arizona have raised concerns about the potential shape of the economic recovery from recession in the U.S. and the rest of the world.

“Ongoing uncertainty on the effects of the coronavirus on U.S. and global economic recovery, increased stock market volatility, the upcoming U.S. presidential election, civil unrest in the U.S., global trade friction, along with the continuation of massive monetary and perhaps fiscal stimulus all provide strong support for gold prices,” Klearman told MarketWatch. There’s “very little reason to see gold prices move lower in the near future.”

August gold GCQ20, +0.99% rose $19.30, or 1.1%, to settle at $1,800.50 an ounce. That was the highest finish for a most-active contract since Sept. 2011, according to Dow Jones Market Data. In August 2011, gold futures settled at a record $1,891.90.

In the first half of this year, gold futures based on the most-active contracts rose just over 18%. For the quarter, the commodity gained nearly 13% and it climbed almost 3% in the month of June.

Meanwhile, September silver SIU20, +2.71% which is the most-active contract, rose 57 cents, or 0.6%, to $18.637 an ounce. For the first six months of the year, the white metal climbed 4%, but has surged nearly 32% over the quarter. It tacked on nearly 0.8% in June.

Prices for the precious metals notched fresh intraday highs after New York Fed President John Williams said Tuesday that the economy seems to be on the mend, but remains damaged. “The economy is still far from healthy and a full recovery will likely take years to achieve,” Williams said.

The market also listened to testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin. Powell and Mnuchin were offering a House Financial Services Committee guidance on the risks to lifting restrictions on commercial activity against keeping the pandemic in check.

In Tuesday dealings, the U.S. dollar was down 0.2% as gauged by the ICE U.S. Dollar Index DXY, -0.09%, a measure of the buck against a half-dozen other currencies. The index traded up by around 1% so far this year. A stronger dollar can weigh on precious metals priced in the currency, deflating the appeal of dollar-pegged commodities.

Rounding out action on Comex on the day, October platinum PLV20, +2.83% rose 2.8% at $851.20 an ounce, ending down around 13% year to date, while September palladium PAU20, +1.26% added 1.8% to $1,966.90 an ounce, up around 3% so far this year.”