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Gold futures extended recent gains to jump to six-week highs Friday, as the June jobs report that showed an increase in the unemployment rate to 4.1% was seen as a sign that high interest rates are slowing down the economy.
There were other indications that could point to a cooling job market, as average hourly earnings rose 3.9% from a year earlier for their smallest gain since 2021, and the job count – while rising by a solid 206K in June – was revised lower for April and May by a combined 111K jobs.
The data “clearly indicates that the Fed is facing significant challenges as the economy continues to deteriorate,” Naeem Aslam, chief investment officer at Zaye Capital Markets, told MarketWatch.
“The weaker labor market and services sector data have particularly influenced market expectations, increasing the likelihood of a Federal Reserve interest rate cut in the coming month,” Milad Azar of XTB Mena said, according to Dow Jones.
Front-month Comex gold (XAUUSD:CUR) for July delivery ended +1.2% to 2,388.50/oz, its highest settlement value since May 22, concluding 2.6% surge for the full week.
Also, front-month July Comex silver (XAGUSD:CUR) finished +2.7% to $2.151/oz, its highest settlement since May 30, up 7.3% for the week, and July copper (HG1:COM) closed +2.6% to $.6585/lb, the best since June 6 and 6.1% higher on the week.
ETFs: (GLD), (GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ), (NYSEARCA:CPER), (NYSEARCA:COPX), (OTC:JJCTF)
Copper futures topped $10K/ton on the London Metal Exchange after Citigroup analysts predicted the industrial metal may retest that level on investor optimism over policy support in China, which could introduce further stimulus to upgrade its renewable energy infrastructure at the Third Plenum meeting in mid-July.
The recent pullback in copper is mainly due to weaker manufacturing data globally, which Citi says is only temporary and has a chance to rise even further and reach $12K/ton due to the onset of rate cuts in major economies.
Insight on Gold Futures
The increase in gold futures to six-week highs can be attributed to the market’s interpretation of the June jobs report as a signal of economic slowdown due to high interest rates. This highlights how gold is often considered a safe-haven asset during times of economic uncertainty or instability.
Market Expectations and Impact on Gold and Silver
The expectation of a Federal Reserve interest rate cut following weaker labor market and services sector data has positively impacted both gold and silver prices. This demonstrates how economic indicators and monetary policy decisions can significantly influence the precious metals market.
Copper Futures and Global Manufacturing Data
The fluctuation in copper futures, with prices reaching $10K/ton and the anticipation of further increases, reflects the impact of global manufacturing data and potential policy support in China. Investors are closely monitoring these factors to gauge the future trajectory of copper prices.
