Gold and Silver Sink Lower Amid Iran War News, Strong Employment Report

 

Gold and Silver Sink Lower Amid Iran War News, Strong Employment Report

(Bullion News Network) – Gold and silver retreated on Friday as the March jobs report blew past expectations. The U.S. economy added 178,000 jobs in March, the employment report found, and unemployment dropped by 0.1% to 4.3%. The spot price of gold slid to end the week, losing more than $78 per troy ounce to fall below $4,600/ozt. Silver prices also pulled back, with the precious metal shedding nearly $1.90 per troy ounce. The gold-silver ratio was largely unchanged, notching a marginal decrease of approximately 0.04% on Friday as both gold and silver pulled back. Platinum and palladium prices increased, with palladium adding $35.12/ozt compared to platinum’s $18.95/ozt.

Oil prices jumped to close the trading week after U.S. President Donald Trump failed to give a timeline on his administration’s efforts to de-escalate the war with Iran, which has led to an indefinite closure of the Strait of Hormuz. Crude oil futures closed at more than $112 per barrel Friday evening. Physical Brent crude oil jumped to more than $140 per barrel on Thursday, its highest price since the financial crisis of 2008. Oil futures continued to lag behind physical throughout the week in a move that some economists say reflects a growing market anxiety over the war in Iran.

The March U.S. employment report soared past expectations on Friday. According to the data, the U.S. economy added 178,000 jobs in March, far higher than the median projection of 59,000 jobs added. U.S. unemployment also retreated, falling 0.1% from 4.4% to 4.3%. The likelihood of a rate hike at the Federal Reserve’s April meeting declined throughout the week, closing at just 0.5%, per CME FedWatch. This is down from 4.1% one week ago. Fed Chair Jerome Powell suggested on Monday that the FOMC is poised to take a “wait and see” approach before hiking rates, a move that helped buoy safe haven assets, including gold, that had slumped on the possibility of an April rate hike.

Meanwhile, the conflict in the Middle East showed few signs of slowing. U.S. forces rescued one of two soldiers who ejected from a fighter jet shot down by Iran; this was the first U.S. plane shot down by Iran since the war began. Trump told reporters Friday afternoon that peace talks between the U.S. and Iran will not be cut short due to the incident. Tehran shut down peace talks with the United States on Friday, claiming that U.S. President Donald Trump’s demands were “unacceptable.” Earlier this week, Iranian Supreme Leader Mojtaba Khamenei said Trump’s claims that Iran was entertaining the idea of a ceasefire were “false and baseless.” At this point, it is unclear whether Iran and the United States will enter formal negotiations, which were expected to be mediated by Pakistan. 

Although safe haven assets like gold traditionally tend to perform well during wartime, gold has underperformed throughout March. The precious metal fell from over $5,300 per troy ounce on March 2nd to a recent low of less than $4,400/ozt on March 26th. Prices have since climbed but remain down from that March 2nd figure.

Domestically, two major inflation reports next week are expected to give traders more insight into the health of the U.S. economy. The February Personal Consumption Expenditures (PCE) report is due next Thursday. Forecasters expect an uptick in inflation from 0.3% to 0.4%, although the year-over-year PCE is projected to decrease 0.1% from 3.1% to 3.0%. The Consumer Price Index for March is due next Friday and is expected to paint a more realistic picture of how the war with Iran has impacted inflation figures. The median forecast projects a price increase of 1%, up from 0.3% in February. The year-over-year CPI is expected to jump from 2.4% to 3.3%, while the core CPI is forecasted to increase 0.1% from 0.2% to 0.3%. A consumer sentiment report is also slated for release on Friday and is expected to show a dip from 55.5 in March to 52.0 in April.