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Metals Stocks: Gold prices retreat from one-month high as yields, dollar rebound after strong U.S. jobs report

Gold prices came off a one-month peak on Friday, trading lower as the U.S. jobs report showed employers hired far more workers than expected in July, pushing Treasury yields and the dollar higher.

Price action

Gold for December delivery
GCZ22,
-0.84%

dropped $13.20 or 0.7%, to $1,778 per ounce.

Silver for September delivery
SIU22,
-1.20%

was down 29 cents, or 1.4%, to trade at $19.84 per ounce. 

Palladium
PAU22,
+2.82%

for September delivery gained $54.50, or 2.6%, to $2,132 per ounce, while platinum
PLV22,
+0.53%

for October delivery rose $3.80, or 0.4%, to $928.70 per ounce. 

Copper
HGU22,
+2.47%

for September delivery rose 8 cents, to trade at $3.569 per pound.

Market drivers

The U.S. economy added a surprisingly strong 528,000 new jobs in July, the Labor Department said on Friday. The unemployment rate fell to pre-pandemic levels despite two straight quarters of GDP economic contraction. 

Economists polled by The Wall Street Journal had called for a 258,000 payrolls gain. The unemployment rate slipped to 3.5% from 3.6%. 

“Today’s labor market report is bad news for gold bulls, with next week’s CPI report the next key test,” said Michael Hewson, chief market analyst at CMC Markets, in a note.

The robust July jobs report is seen reinforcing expectations the Federal Reserve will continue to move aggressively to tighten monetary policy as it attempts to bring down the highest inflation in more than four decades without spiking unemployment and causing a recession. 

Meanwhile, geopolitical tensions remained in focus as China continued its military exercises in response to U.S. House Speaker Nancy Pelosi’s Taiwan visit earlier this week. Beijing has suspended cooperation with Washington in a number of areas, including dialogue between senior-level military commanders and climate talks. China also announced that it will impose sanctions against Pelosi and her immediate family in response to what Beijing termed her “vicious” and “provocative” actions.

Treasury yields jumped sharply in the wake of the employment report with the yield on the 2-year Treasury note
TMUBMUSD02Y,
3.213%

rising to 3.197%, while the 10-year Treasury note
TMUBMUSD10Y,
2.845%

climbed to 2.848%. 

The U.S. dollar index
DXY,
+0.97%

was up 0.9% to 106.64, after sliding 0.7% on Thursday, the largest fall since July 19, making the yellow metal less appealing for other currency holders. 

Hear from Ray Dalio at the Best New Ideas in Money Festival on Sept. 21/22 in New York. The hedge-fund pioneer has strong views on where the economy is headed.

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