Futures for gold and silver were staging a mini rebound Friday, capping a volatile week for precious metals, as metals dealers digested a monthly update on U.S. employment that came in slightly weaker than expected.
The U.S. regained 49,000 jobs in January and the unemployment rate fell to 6.3% from 6.7%, but meager gains underscore a slow recovery for the economy in the throes of the COVID-19 pandemic.
The downbeat data may further boost the likelihood for a second U.S. COVID-19 stimulus package, which would create more debt and weaken the value of the dollar, lifting demand for dollar-denominated gold prices.
Looking at the nonfarm payrolls data, “it is clear that massive strength that we have seen previously in a lot of areas in no longer there,” said Naeem Aslam, chief market analyst at AvaTrade, in emailed commentary. “This means that the U.S. lawmakers can push really hard for the next second stimulus package.”
The U.S. Senate approved a budget plan for President Biden’s $1.9 trillion relief package early Friday.
“All eyes will be on Washington and how quick they can push the next stimulus package,” said Aslam.
Against the backdrop, gold for April delivery GC00, +0.94% GCJ21, +0.94% rose $14, or 0.8%, at $1,805.20 an ounce, after dropping 2.4% on Thursday to mark the lowest settlement since late November, FactSet data show. For the week, most-active contract prices trade down by 2.4%.
The prospects for a middling economic rebound, at least in the first half of 2021, sets a bullish pathway for gold, some strategists argue.
“The U.S. employment situation report for January, arguably the most important U.S. data point of the month, showed a non-farm payrolls rise of 49,000 and an unemployment rate of 6.3%…Still, the data suggests the world’s largest economy is still far from fully recovered from the Covid-19 pandemic and is still down 12 million jobs from last year at this time,” wrote Jim Wyckoff, senior analyst at Kitco.com.
Economists polled by Dow Jones and The Wall Street Journal had expected a 55,000 gain and the unemployment rate to remain steady.
On Comex Friday, March silver SI00 SIH21 added nearly 50 cents, or 1.9%, to trade at $26.73 an ounce, after the metal also skidded by 2.4% in the prior session. Prices rose 1.8% on Wednesday, following a more than 10% decline for futures Tuesday. For the week, they trade down by less than 1%.
Over the week, gold and silver prices have been hammered by rising U.S. bond yields and a U.S. stronger dollar. Dollar-pegged assets like gold tend to slump when the currency strengthens because they become comparatively more expensive to own for overseas buyers.
“It’s been a rotten week for gold. Higher yields and a stronger dollar after a big technical breakout has crushed the yellow metal, driving it back below $1,800 for the first time since the start of December,” wrote Craig Erlam, senior market analyst at Oanda in a note.
The dollar, retreating Friday, is up 0.6% so far this week, as measured by the ICE U.S. Dollar DXY, -0.45% while 10-year Treasury note yields TMUBMUSD10Y, 1.150% are at around 1.15% from 1.090% last Friday.
Recent volatility in silver futures has been attributed to an attempted short-squeeze by individual investors on internet message boards who also were blamed for driving up the values in shares of GameStop Corp. GME, +37.29% and AMC Entertainment Holdings AMC, +3.26% in the past few weeks.
Read Barron’s: Squeeze play added fuel to rising silver prices. Here’s why the metal remains undervalued
Among other metals traded on Comex, March copper HGH21, +0.89% rose 0.9% to $3.5855 a pound, with prices up around 0.8% for the week. April platinum PLJ21, +2.57% traded at $1,130.30 an ounce, up 2.5% for the session and trading 4.8% higher on the week. March palladium PAH21, +2.42% added 2.4% to $2,336 an ounce, poised for a weekly rise of around 5.8%.
The World Gold Council reported Thursday that global gold exchange-traded funds in January saw inflows of 13.8 metric tons, ,or $1 billion, after two consecutive months of outflows.
The gold-backed SPDR Gold Shares GLD, +0.80% was up 0.8% Friday, but poised for a weekly loss of 1.9%.
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