Gold and silver prices today: Yellow metal firms up, U.S. report sparks concerns of future job losses

Gold prices opened on the Multi Commodity Exchange (MCX) on Monday at Rs 59,570 per 10 grams and hit an intraday low of Rs 59,516. In the international market, prices hovered around $1,938.55 per troy ounce. Meanwhile, silver opened at Rs 75,099 per kg and hit an intraday low of Rs 75,075 on the MCX. The price hovered around $24.23 per troy ounce in the international market.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "Gold price firmed, buoyed by hopes that the Federal Reserve would take a pause from interest rate hikes this year after U.S. data showed a jump in the unemployment rate, but bullion held below last session's one-month highs on a strong dollar and Yields."

The U.S. dollar stood not far from its recent three-month highs, hovering above 104 mark; U.S. Yields continue to trade above the 4% level, supporting the sentiments for further rate hikes.

Modi, "Last week, the U.S. Core PCE price index was more or less in line with expectations. U.S. job growth picked up in August, but the unemployment rate jumped to 3.8% and wage gains moderated. This triggered an immediate buying momentum in safe-haven assets, but those gains were capped as U.S. manufacturing PMI contracted for a 10th straight month in August and was reported below 50 mark."

Premiums on physical gold in China eased off recent highs last week as safe-haven buying cooled on hopes that stimulus could help the top bullion buyer's ailing economy. Amidst these data points, bets for a pause in September Fed meeting has increased to more than 90%. Volatility today could be a bit lower as U.S. markets is shut today on the back labour day.

Amit Khare, Associate Vice President at GCL Broking, said, "MCX Gold and Silver gave mixed closing yesterday, October Gold closed at 59395(0.04%) and December Silver closed at 75089(-0.78%). Bullions daily charts are showing some profit booking, Momentum Indicator RSI also indicating the same. So traders are advised to book their long postions and can make fresh short positions in Gold and Silver near given resistance level one with the stop loss of resistance level two and book near given support levels: Gold October Support 59200/59000 and Resistance 59500/59700. Silver December Support 74500/74000 and Resistance 75600/76200."

The U.S. nonfarm payroll report for August was softer than expected as although the headline job figure at 187k was higher than the consensus of 170k jobs, July data was revised lower by 30k, which thus extended the streak of downward revision in monthly job reports -- a continuous trend observed this year. Labour force participation rate jumped to 62.80% from 62.60% in July, the highest level since February 2020, which was instrumental in pushing up the unemployment rate from 3.50% in July to 3.80% in August. Increased labour force participation rate will alleviate wage pressure to some extent, thus reducing wage inflationary pressure to some extent.

Also read: I’m a 55-year-old govt employee, and 70% of my salary goes towards repaying four loans. Should I take VRS?

Also read:I’m a senior citizen and have Rs 60 lakh in FDs. How can I generate more income for a comfortable retired life?

Praveen Singh – Associate V.P., Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, "The U.S. temp help jobs declined 0.70% from July, which is the third consecutive monthly decline. The trend is disconcerting as it may culminate into employers eventually cutting down permanent jobs at an increased pace, which increases the possibility of mounting job losses ahead."

Average hourly earnings in August slipped to 0.20% from 0.40% in July and fell short of expectations of a 0.30% rise. Average hourly earnings on y-o-y basis were recorded at 4.30%, which matched the forecast. The two-month payroll revision was -110k jobs. Hours worked data was a silver lining in the job report as average weekly hours all employees at 34.40 topped the forecast of 34.30 hours, added Singh.

In another major US economic report, ISM manufacturing PMI data (August) improved to 47.60 from 46.40 in July, thus beating the estimate of 47 as ISM prices paid surged to 48.40 from 42.60 in July, which stoked inflationary concerns.

"U.S. treasuries initially rallied on soft U.S. job report; however, the rally turned out to be abortive on notions that seasonality, Hollywood strikes, and bankruptcy of trucking company Yellow Corp may have understated the headline figure that could be reversed in the future job reports. Heavy corporate bond issuance worth $120 billion lined up in September and ISM prices paid data also weighed on the bonds," said Singh.

Spot gold closed almost flat at $1940 Friday as the U.S. yields surged, thus boosting the U.S. Dollar Index,  though the yellow metal was up nearly 1.37% on the week as yields were lower in the week ending September 1.

In another notable development positive for gold, Canadian GDP unexpectedly contracted by 0.20% Vs the forecast of an expansion by 1.20%. Elsewhere, China's banks cut mortgage rates to stimulate the real sector. China's Caixin manufacturing PMI showed an unexpected expansion in August. Disappointing data out of Europe stoke stagflation fears.

Total known global gold ETF holdings rose for the second consecutive day on August 31. Gold bulls may attempt to test $1965 resistance in near term. Interim resistance comes at $1955. Support is at $1931/$1914. Overall, dip buying is expected to be a preferred trade.