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Gold futures early Friday were flipping between gains and losses, after a report on the U.S. labor market showed that the country created 199,000 new jobs in December, far short of estimates for more than twice that figure.
The report, which some viewed as mixed because of some positive aspects embedded in the monthly update, may signal that labor shortages and the omicron variant of coronavirus that causes COVID-19 are still hamstringing the jobs market.
At last check, February gold
GCG22,
GC00,
was up 50 cents, or less than 0.1%, at $1,790 an ounce, after a 2% drop — its steepest daily decline in over six weeks — left the most-active contract at the lowest level since Dec. 21 on Thursday.
Gold and other precious metals have been pressured by prospects of tighter monetary policy from the U.S. Federal Reserve and it is unclear what if any impact the Friday figures will have on the central bank, which next meets Jan. 25-26.
A few bright spots in the report included a jobless rate that slipped to 3.9% from 4.2%, hitting a new pandemic low, while hourly pay jumped 19 cents, or 0.6%, to $30.31.
Over the week, strength in the U.S. dollar, with the ICE U.S. Dollar Index
DXY,
up 0.3% on the week and a steady climb in Treasury yields, have combined to dull appetite for nonyielding precious metals that are priced in dollars.
For the week, gold is down 2.2%, which would mark the sharpest weekly slip since Nov. 26, as the 10-year Treasury note
TMUBMUSD10Y,
yields 1.733%, holding near the highest level since late March of 2021.
Naeem Aslam, chief market analyst at AvaTrade, said that gold has been under pressure because “traders know that the Fed is serious about controlling inflation now and as a result they are adopting a hawkish monetary policy.”
Indeed, minutes from the Fed’s last meeting in 2021 indicated that policy makers may be more inclined to take a more aggressive tack in winding down the central bank’s $8.9 trillion balance sheet than the last time it reduced it, after it raises interest rates at least three times in 2022, market-based estimates project.
Meanwhile, March silver
SIH22,
was trading off 8 cents, or 0.4%, at around $22.11 an ounce, after falling 4.2% on Thursday, marking its lowest level since mid-December.
