SBSW - Gold prices slide after January jobs report crushes estimates
2024-02-02 16:25:29 ET
- Gold futures fell Friday while the dollar and Treasury yields jumped after a much stronger than expected U.S. nonfarm payrolls report - so strong that it likely kills off any lingering chance that the Federal Reserve might start cutting interest rates in March.
- The latest job report showed an acceleration in hiring last month, with employers adding 353K jobs in January - roughly double the numbers expected by economists - a sharp upward revision to December payrolls and unemployment at a surprisingly low 3.7%.
- According to the CME Fed Watch Tool, traders now expect a ~70% chance of a U.S. rate cut in May, compared to 92% before the jobs report.
- "If these rates stay where they are and there is a lack of clarity around that, what we'll likely see is a rather muted environment for the upside for gold," World Gold Council's Joseph Cavatoni said .
- Front-month Comex gold ( XAUUSD:CUR ) for February delivery ended Friday -0.8% to $2,036.10/oz, while February silver ( XAGUSD:CUR ) settled -1.8% Friday at $22.701/oz; for the week, gold gained 0.9% while silver fell 0.2%.
- ETFs: ( NYSEARCA: GLD ), ( NYSEARCA: GDX ), ( GDXJ ), ( IAU ), ( NUGT ), ( PHYS ), ( GLDM ), ( AAAU ), ( SGOL ), ( BAR ), ( OUNZ ), ( SLV ), ( PSLV ), ( SIVR ), ( SIL ), ( SILJ ), ( SLVP )
- Gold Fields ( GFI ) closed -8.1% Friday after BMO Capital cut the stock to Underperform from Market Perform with a $12 price target, down from $14, believing its premium valuation is not justified especially in light of the operational risks it sees across the portfolio.
- Among other individual names: Newmont ( NEM ) -3.3% , Barrick Gold ( GOLD ) -3% , Kinross Gold ( KGC ) -4.3% , Agnico Eagle Mines ( AEM ) -3.9% , Franco Nevada ( FNV ) -3.2% , Iamgold ( IAG ) -4.1% , Eldorado Gold ( EGO ) -4.1% , Harmony Gold ( HMY ) -4.6% , DRDGold ( DRD ) -3.9% , Sibanye Stillwater ( SBSW ) -4.8% , Coeur Mining ( CDE ) -4.2% , Hecla Mining ( HL ) -4.1% , Endeavour Silver ( EXK ) -3.3% , Pan American Silver ( PAAS ) -3% .
- The drop in gold comes after a four-day winning streak, which brought the price close to the all-time high settlement of $2,093/oz set in December.
- Gold has seen strength due to heightened fighting in the Red Sea that has disrupted shipping lanes, and "geopolitical tensions will keep investor interest in gold elevated," BMI Global Commodities said.
- Physical demand for gold is still high due to resilient central bank purchases and strong retail demand, serving as key support for prices, Goldman Sachs analysts said as they remain bullish on gold with 12-month target at $2,175/oz.