Futures for gold and silver were staging a mini rebound Friday, capping a volatile week for precious metals, as metals dealers digested a monthly update on U.S. employment that came in slightly weaker than expected.Metals also may be scoring a lift from the U.S. Senate’s approval of a budget plan for President Biden’s $1.9 trillion relief package early Friday.
In economic data, the U.S. regained 49,000 jobs in January and the unemployment rate fell to 6.3% from 6.7%, but meager gains underscore a slow recovery for the economy in the throes of the COVID-19 pandemic.
The prospects for a middling rebound, at least in the first half of 2021, sets a bullish pathway for gold, some strategists argue.
“The U.S. employment situation report for January, arguably the most important U.S. data point of the month, showed a non-farm payrolls rise of 49,000 and an unemployment rate of 6.3%…Still, the data suggests the world’s largest economy is still far from fully recovered from the Covid-19 pandemic and is still down 12 million jobs from last year at this time,” wrote Jim Wyckoff, senior analyst at Kitco.com.
Economists polled by Dow Jones and The Wall Street Journal had expected a 55,000 gain and the unemployment rate to remain steady.
Over the week, gold and silver prices have been hammered by rising U.S. bond yields and a stronger dollar. Dollar-pegged assets like gold tend to slump when the currency strengthens because they become comparatively more expensive to own for overseas buyers.
The dollar, retreating early Friday, is up 0.7% so far this week, as measured by the ICE U.S. Dollar while 10-year Treasury note yields are at around 1.16% from 1.090% last Friday.
Against the backdrop, gold futures for April delivery were trading $6.30, or 0.4%, higher at $1,797.80 an ounce, after dropping 2.4% on Thursday to mark the lowest settlement since late November, FactSet data show.
March silver futures were picking up 35 cents, or 1.3%, to trade at around $26.60 an ounce, after the metal also skidded by 2.4% in the prior session. Prices rose 1.8% on Wednesday, following a more than 10% decline for futures Tuesday.
Recent volatility in silver futures has been attributed to an attempted short-squeeze by individual investors on internet message boards who also were blamed for driving up the values in shares of GameStop Corp.and AMC Entertainment Holdings in the past few weeks.
“It’s been a rotten week for gold. Higher yields and a stronger dollar after a big technical breakout has crushed the yellow metal, driving it back below $1,800 for the first time since the start of December,” wrote Craig Erlam, senior market analyst at Oanda in a note.
For the week, gold is headed for a weekly slide of 2.6%, while silver is on pace for a 1.2% weekly slump, based on the most-active contract.