MW: Gold futures extend gains in weak jobs-report fallout
Gold futures climbed Monday, adding to a Friday surge that handed the precious metal its sharpest single-day gain in nearly three months as investors rolled back expectations for interest-rate hikes this year.
August gold futures GCQ6, +0.16% were up $2.10, or 0.2%, to $1,244.60 an ounce. Futures prices briefly pushed above $1,250 intraday for first time since May 23. Gold futures, which suffered losses in each of the previous three weeks as markets grew increasingly sure of a June hike, scored a gain of roughly 2.2% last week.
Gold rallied last week after the release of a surprisingly weak May U.S. jobs report. The data showed that new jobs were created at the slowest pace in 5½ years last month, while April’s headline number was cut.
In response, Federal Reserve interest rate-hike expectations have been scaled back sharply, boosting the appeal of holding precious metals that don’t bear interest. According to the CME Group’s FedWatch tool, traders are now pricing in a slim 4% chance that the Fed hikes rates when it gathers at a two-day policy meeting June 14-15. The odds of a July interest-rate increase sit at 31%. Traders are pricing in a 63% chance that at least one interest-rate hike is coming by December of this year.
“Rate hike expectations are essentially back at their mid-May level before the publication of the Fed meeting minutes caused them to rise,” said Commerzbank commodities analysts in a note. “At that time, [spot] gold was trading at $1,280 per troy ounce. Against this backdrop, gold thus has further upside potential.”
Read: Here’s what might fuel a further rally for gold
On Monday, gold rose even as the dollar, which was hammered on Friday, tipped lower early Monday, according to an index comparing the dollar with a basket of six rival currencies. The ICE U.S. Dollar Index DXY, +0.11% was up 0.1%. A weaker dollar is generally supportive to prices of dollar-priced commodities including gold and silver, making them cheaper to buyers using other currencies.
In other trading, July silver SIN6, +0.43% gained 9 cents, or 0.6%, to $16.46 an ounce. Last week, silver was up about 0.6%.
The iShares Silver Trust exchange-traded fund SLV, +0.51% was flat in premarket trade, while gold ETF SPDR Gold Trust GLD, +0.07% was trading down 0.2% early Monday.
Gold-mining stocks surged late last week. The VanEck Vectors Gold Miners ETF GDX, -0.87% logged its best daily gain in nearly seven years on Friday, according to FactSet data. Early Monday, GDX gave up some of that gain, down 0.7%.
