Gold Loses Strength After Strong Job Report; Silver Hits 13-Year High

 

Gold Slows Down After Strong U.S. Labor Report; Silver Crosses $36/ozt

(Bullion News Network) – The spot price of gold pulled back today, shedding just under $43 per troy ounce on the heels of a better-than-expected U.S. labor market report. This was the precious metal’s second consecutive loss, although gold is still up on the week following a large price jump that pushed prices to $3,381.52 per troy ounce. Despite several geopolitical and economic uncertainties driving demand for safe haven assets, the gold market retreated after optimistic labor market readings which saw an uptick in employment, a drop in unemployment, and an increase in U.S. wages. 

Silver moved opposite to gold to end the week, rallying past $36 per troy ounce to set a 13-year high. The last time silver prices hit $36/ozt was in 2011, when concerns about the European economic system propelled the metal to its highest price since the Hunt Brothers silver short squeeze drove silver to an all-time high. Analysts say that this silver breakout is particularly significant, since the precious metal has attempted to push past the $35 barrier for several months. Today, the price of silver crossed $36 per troy ounce for the first time since 2011.

The lopsided price action drove the gold-silver ratio lower for the second day in a row, securing the lowest GSR since early April. Traders often use the gold-silver ratio to measure which of the two metals may be undervalued, and that ratio has retreated by just under eight points since last Friday’s close. The gold-silver ratio was even higher one month ago, peaking at 103.67:1 on May 7th before hovering near 100:1 until a series of drops starting on June 1st.

A better-than-expected labor market reading may be behind gold’s price dip, which erased some of the metal’s Monday gains. U.S. employment jumped to 139,000, higher than the projected reading of 125,000, while unemployment remained unchanged from April at 4.2%. U.S. hourly wages increased by 0.4%, up 0.1% from the median forecast of 0.3%. Year-over-year hourly wages also outpaced market expectations, climbing from 3.8% to 3.9% in May against a projection of 3.7%. U.S. President Donald Trump touted the numbers as a win on Truth Social after imploring Federal Reserve Chair Jerome Powell to cut interest rates.

Unsurprisingly, Wall Street surged on the news. The Dow, S&P 500, and Nasdaq all gained, with the Nasdaq rallying a total of 1.2% as Tesla added 3% to its value after a 14% drop on Thursday. The S&P 500 crossed 6,000 points this afternoon for the first time since February, when U.S. President Donald Trump’s historic slate of “Liberation Day” tariffs rocked the world economy.

For both Wall Street and the precious metals market, next week is shaping up to be a major test.

The week of economic data reports begins on Wednesday with a fresh Consumer Price Index (CPI) reading. This index is one of the Federal Reserve’s key inflation gauges. Analysts project that the May CPI will remain unchanged from April at 0.2%, while the year-over-year and core CPI are expected to increase by 0.1% each. It is unlikely that this report will impact the probability of a rate cut from the Federal Reserve. CME FedWatch now projects a 99.9% probability that the Fed will vote to keep rates unchanged, along with a 0.1% chance that the FOMC will raise rates by 25 basis points. Notably, this is the first time in months that CME Group has projected a possible rate hike. 

On Thursday, traders will turn to producer prices with the May Producer Price Index (PPI). This report is expected to be good news, with the median forecast projecting 0.2% growth compared to the 0.5% retreat in April. Next Friday, the preliminary consumer sentiment report for June will go public. Forecasters say that consumer sentiment is expected to increase to 55.0, up from 52.2 in April. An unexpected drop in consumer sentiment could be a boon for safe haven assets, which tend to thrive in periods of dour expectations and economic uncertainty.

Gold will end the day down as silver secures a 13-year high. The gold-silver ratio will settle the week down to under 92:1.