Gold's best rally in weeks reversed within a single session after stronger-than-expected August payrolls revived bets on a Federal Reserve rate hike. Silver and gold-mining stocks fell even faster than gold as the data undercut the case for a September hold.
Gold's rally lasted one session. Gold closed Thursday at $4,539.90, its best day in weeks, after Fed Governor Waller said he would lean toward holding rates in September if August inflation shows progress. That remark pulled the odds of a hike from 63% down to a coin flip. Friday morning, though, August payrolls printed 162,000 against a consensus of 55,000, and the hike odds jumped back above 60% within minutes. Gold now trades near $4,427, with silver falling faster.
What Drove Thursday's Rally
Waller's comments pushed yields lower across the curve. The two-year yield fell to 4.32%, while the 10-year closed at 4.76% for a second day of declines. Stocks rallied too: the Dow gained 624 points, the S&P 500 rose 1.1%, and the Nasdaq climbed 1.4% in their best session in nearly a month. Gold itself rose 2.8% into the close.
Jobs Data Erased the Move
Payrolls rose 162,000 in August, the strongest month since March, with the prior two months revised up by a combined 55,000, turning July's loss into a gain of 21,000. The unemployment rate held at 4.1% and wages rose 0.3%. Short-end yields jumped, and the USD Index reversed from a weekly low near 98.9 to trade above 99.3. Bank of America counted 61 inflation references in Fed Chair Warsh's Jackson Hole speech against 30 for the labor market, so Friday's strong jobs number removed the hold camp's main argument. Next Friday's CPI print is the last data point before the Fed's decision.
Silver And Miners Fell Faster
Silver led Thursday's rally and is leading Friday's decline, falling faster than gold in both directions. Gold-mining ETF GDXJ closed about 3.3% higher near $132.3 Thursday and was down roughly 3.4% Friday, more than erasing the prior session's gain.
The Broader Chart Still Looks Fragile
Gold has fallen from a peak of $4,755. The metal posted a bearish engulfing candle at $4,474.29 on Friday. The 200-period moving average sits near $4,308.67. This week's back-and-forth resembles a pattern seen in mid-August, and both consolidations could form the shoulders of a head-and-shoulders top with a target near $4,100, though that figure is treated as a minimum, not a ceiling.
Sources: Investing.com Analysis, Investing.com Commodities News
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