Gold’s long win streak hits pause ahead of jobs report

January 5, 2018

New York (Jan 5)  Gold started Friday on slightly shaky ground ahead of the latest U.S. jobs report, with some caution emerging among investors after a win streak of 10 sessions for the yellow metal — its longest run in more than six years.

February gold GCG8, -0.21% slipped $3.50, or 0.3%, to $1,318.00 an ounce. Futures prices logged their highest settlement on Thursday since Sept. 15, at $1,321.60. The tenth-consecutive session of gains was the longest such streak for a most-active contract since July 2011, according to FactSet data.

The exchange-traded SPDR Gold Trust GLD, +0.51%  traded slightly firmer premarket Friday, while the VanEck Vectors Gold Miners ETF GDX, +0.64% was flat.

Gold eased as a leading dollar index recovered somewhat from its lowest level in about three months. The ICE U.S. Dollar Index DXY, +0.16% edged up 0.2%.

Gold’s streak was also tested in part as U.S. stocks were poised for another record-setting session on Friday, as Dow futures breezed further past the 25,000 milestone in a global stock rally that looked to have new life to kick off 2018.

The top-tier monthly jobs report is out at 8:30 a.m. Eastern, and investors are particularly looking for a read on wages as a gauge of inflation. The minutes from the December Federal Reserve meeting showed at least some policy makers, though upbeat, were still worried about persistently low inflation levels in holding back economic potential.

Read: Lack of wage growth will likely dampen celebration of December jobs report

Economists polled by MarketWatch forecast that wages grew 0.3% in December, up from 0.2% in November. Nonfarm payrolls are expected to have risen by 195,000, down slightly from the 228,000 seen in November. The unemployment rate is forecast to remain at 4.1%.

Gold could resume its rise and the dollar stay under selling pressure “provided that today’s U.S. payrolls report does not show a surprise acceleration of wages,” said Hans Redeker, a currency analyst with Morgan Stanley, in a note.

“U.S. 10-year implied real yield has eased to 0.437% from the 0.452% reached on Tuesday as the market once again failed to translate strong U.S. economic activity data into higher nominal yields,” he added. Higher interest rates, translated to higher yields, also limit the appeal of nonyielding bullion in favor of yield-bearing assets but current Treasury yield levels have done little to hold back gold’s rise.

In other economic news on Friday, figures for the foreign trade deficit for November are due for release at 8:30 a.m. Eastern. The ISM nonmanufacturing report for December and an update on factory orders for November are scheduled for 10 a.m. Eastern.

Among Fed speakers, Philadelphia Fed President Patrick Harker is slated to give a speech on the economic outlook at the American Economic Association at 10:15 a.m. Eastern in Philadelphia. Cleveland Fed President Loretta Mester is expected to speak at the same event at 12:30 p.m. Eastern.

Expectations of higher U.S. interest rates later this year, and debate continues even at the Fed over how aggressive that course of policy will need to be, plus the passage of the Republican tax bill have failed to give the dollar a lift, helping gold. A weaker dollar tends to provide a boost to dollar-pegged commodities, including gold, making them more attractive to users of weaker monetary units.

Read: Jeff Reeves has 7 reasons why investors should go for gold in 2018

Palladium futures, meanwhile, pulled back slightly after hitting record levels Thursday. March palladium PAH8, -0.27%  eased $3.60, or 0.3%, to $1,091.15 an ounce. It settled a day earlier at $1,094.75 after tapping a high of $1,101.70. These were the highest prices for a most-active futures contract on records dating back to 1984, according to FactSet data.


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