Gold extended a surge to a 13-month high after US data showed the jobs market loosening more than expected, diminishing bets the Federal Reserve will hike interest rates again.
(Bloomberg) — Gold extended a surge to a 13-month high after US data showed the jobs market loosening more than expected, diminishing bets the Federal Reserve will hike interest rates again.
A report Wednesday from the ADP Research Institute showed the US added 145,000 jobs in March, significantly below the median economist forecast. The print comes ahead of the headline employment report on Friday, which could propel gold to a record price if it comes in weak.
The precious metal on Tuesday closed above the $2,000 an ounce threshold for the first time since March 2022, after data showed vacancies at US employers dropped in February to the lowest since May 2021. It’s a welcome sign for the Fed, which has tried to cool the labor market to slow inflation.
The metal is nearing its all-time high of $2,075.47 reached in August 2020 after a sharp rally last month driven by turmoil in the US and Swiss banking sectors. Bullion’s latest gains have come as cooling economic indicators curb expectations for further Fed tightening, which tends to weigh on the non-interest bearing asset.
The central bank’s officials have continued to push back against the prospect of rate cuts later this year, insisting that more is required to tame inflation. In a speech Tuesday, Federal Reserve Bank of Cleveland President Loretta Mester advocated raising rates again in 2023 and holding them there for some time.
“The mood in the gold market has improved massively since the US banking turmoil a couple of weeks ago,” said Carsten Menke, an analyst at Julius Baer Group Ltd. “We still believe that a US recession will be avoided and that a rapid reversal of US monetary is unlikely to materialize.”
Spot gold rose 0.5% to $2,030.34 an ounce as of 1:31 p.m. in London, after closing up 1.8% in the previous session. The Bloomberg Dollar Spot Index weakened was little changed. Silver edged lower after surging 4.3% on Tuesday, while platinum was steady and palladium gained.
–With assistance from Yvonne Yue Li.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.