Precious Metals Market News (5 July 2024) | Gold and Silver Jump Amid Renewed Rate Cut Hopes, Slowing Jobs Market

 

Precious Metals Market News (5 July 2024) | Gold and Silver Prices Up After June Jobs Report

Gold (+$34.05) and silver (+$.77) prices jumped this morning after the Employment Situation Summary hinted at slowing growth in the U.S. job market. The report, released at 8:30 am ET this morning, renewed market bets that an interest rate cut from the Federal Reserve may be coming in the next few months. On Wednesday, precious metals ended a shortened trading day in the green as investors turned their attention to the Bureau of Labor Statistics monthly employment data report. 

According to that report, non-farm job creation last month barely outpaced expectations, with an estimated 206,000 new payrolls added in June. The report also noted a marginal increase in unemployment, with the rate rising to 4.1%. That’s .1% higher than the 4% estimate. Gold, silver, and platinum prices jumped in response to the June jobs data, which might support a September rate cut from the Federal Reserve. 

Earlier this week, Federal Reserve minutes from the FOMC’s June meeting reiterated that the Federal Reserve needs to see that the economy is moving toward 2% inflation and lower unemployment before they will consider cutting rates. A slowing job market could incentivize the Federal Reserve to cut interest rates to stimulate spending and growth. Interest rate speculation has played an undeniable role in precious metal price-action this year, and heightened confidence in a September rate cut has once again stimulated gold and silver markets.

Gold Logs New Monthly High on New BLS Jobs Report

Gold (+$34.05) gained nearly $35 after the this morning’s jobs report from the Bureau of Labor Statistics. With today’s jump, gold logged yet another monthly high, cresting close to the gold bull target of $2,400/oz. The yellow metal has claimed gains every day since a price dip to $2,298.40 on 26 June. If gold bulls establish a strong support at $2,400, gold might be on track to crest above its all-time high of $2,450.05.

Sustained market confidence in a September interest rate cut is clearly behind gold’s exceptional end-of-week performance. Real-time projections estimate a 72.5% chance that interest rates will ease when the Federal Reserve’s FOMC meets in September. Speculation surrounding if – and when – the Fed will cut interest rates has been the main driver behind a historic year for the gold market. 

On Wednesday, minutes from the Federal Reserve’s June meeting confirmed that the committee remains cautious about prematurely cutting rates:

[Members] would be prepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede the attainment of the Committee’s goals. Members also agreed that their assessments would take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Two more tests this month will give investors a better idea of where interest rates may be heading. The Consumer Price Index (CPI) will be released on 11 July, and a Personal Consumption Expenditures (PCE) report slated for publication on the 26th should fuel further speculation about interest rates – and gold prices. 

Renewed Rate Cut Hopes Drive Silver Past $31

A cooling job market also drove silver (+$.77) to another recent high this morning. The precious metal is up by over 75 cents and current sits well above the $31 resistance line. Today’s silver price-action marks only the second time the metal has crested above the $31 level this month, a big victory for silver bulls hoping to establish $31 as a strong support. On the year, silver is up 28.49%. 

Earlier this year, analysts noted that the global supply deficit of silver is projected to grow in 2024. Demand from the explosive Chinese solar power sector is one of several reasons why demand continues to outpace supply for pure silver bullion. As far as supply-demand dynamics are concerned, silver’s prospects for a bigger breakout in 2024 are impressive. 

Silver price-action has generally mirrored gold movements this year. Like gold, the metal jumped this morning after the Bureau of Labor Statistics released new jobs data, which suggested a cooling job market. Expect silver prices to continue correlating with gold market movements, reacting strongly to news related to the Federal Reserve’s promises to cut interest rates sometime this year. 

The gold-silver ratio dropped this morning as silver rocketed past the $31 level, falling .73 and settling at around 76.39. Another large silver breakout may cause some investors to flip from silver to gold, but the ratio remains reasonable for now at just over 76.30:1.