Gold prices traded below $1820, US stocks fell, and the market awaited the non-farm payroll data to provide clarity.
On Thursday, October 5, the New York market saw a decline in stocks as investors adopted a cautious stance ahead of Friday's crucial employment data release, which could determine the next move in interest rates. At the time of writing, the Dow Jones Industrial Average was down 0.10%, while the S&P 500 and Nasdaq Composite fell 0.41% and 0.63%, respectively. Initial jobless claims for the week ending September 30 totaled 207,000, only 2,000 more than the previous week. Economists had predicted 210,000, according to the Dow Jones consensus estimate. While the slight increase in initial claims was largely in line with Wall Street expectations, it disappointed some investors who had hoped the weekly data would begin to show a weakening labor market, ending the interest rate hikes that have hurt stocks. Following the release of initial jobless claims, the 10-year Treasury yield initially rose slightly before falling slightly. The final yield was 4.714%. Economists surveyed by Dow Jones expect nonfarm payrolls to increase by 170,000 in September, down from 187,000 in August. While investors don't want to see a recession, they are hoping for some softening in the labor market that would cause the Federal Reserve to reconsider another rate hike and prevent US Treasury yields from rising to 16-year highs. Payroll processor ADP said Wednesday that private sector job growth totaled 89,000 in September, sending stocks slightly higher. This figure was far below the Dow Jones estimate of 160,000, seemingly convincing investors that the labor market is easing. Major indexes are set for another week of declines. The Dow is down 0.1% so far this week, turning negative during Tuesday's sell-off. The S&P 500 and Nasdaq Composite are down about 0.2% this week. Gold prices continued to fall on Thursday, dropping nearly $7 to a low of $1812 after the US initial claims data was released. It is currently trading at $1817.36 per ounce. Gold prices recorded their worst decline since 2016 on Wednesday, falling for an eighth consecutive trading day, as the possibility of US interest rates remaining higher for longer dampened market sentiment. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell to their lowest level since August 2019 on Wednesday, reflecting investor demand. "Gold prices have really plummeted in the last few weeks, and the main driver seems to be the rise in long-term US interest rates," said Edward Gardner, commodities economist at Capital Economics. Traders are pricing in about a 37% chance of another Fed rate hike this year, according to the CME Fedwatch tool. Gold is highly sensitive to rising US interest rates because it increases the opportunity cost of holding gold. "As we get towards the end of this year, we do think that gold prices will appreciate next year, and we think the Fed will cut rates more than the market is currently expecting," Gardner said.
Time:
2023-10-06 11:10
On Thursday, October 5th, the New York market saw a decline in stocks as investors adopted a cautious stance ahead of Friday's crucial employment data release, which could determine the next steps in interest rate movements. As of press time, the Dow Jones Industrial Average was down 0.10%, while the S&P 500 and Nasdaq Composite indices fell by 0.41% and 0.63%, respectively.
For the week ending September 30th, initial jobless claims totaled 207,000, only 2,000 more than the previous week. Economists had predicted 210,000, according to the Dow Jones consensus estimate. While the slight increase in initial claims largely aligned with Wall Street expectations, it disappointed some investors who had hoped the weekly data would begin to show a weakening labor market, thus ending the interest rate hikes that have hurt stocks.
Following the release of initial jobless claims, the yield on 10-year Treasury notes initially rose slightly before falling slightly. The final yield was 4.714%.
Economists surveyed by Dow Jones expect nonfarm payrolls to increase by 170,000 in September, down from 187,000 in August. While investors don't want a recession, they are hoping for some softening in the labor market that would cause the Federal Reserve to reconsider another rate hike and prevent US Treasury yields from reaching 16-year highs.
The stock market saw a slight rise after ADP, a payroll processing company, reported on Wednesday that private sector job growth totaled 89,000 in September. This figure was far below the Dow Jones' expectation of 160,000, seemingly convincing investors that the labor market is easing.
Major stock indices are set for another week of declines. The Dow Jones index is down 0.1% so far this week, turning negative during Tuesday's sell-off. The S&P 500 and Nasdaq Composite indices are down about 0.2% this week.
Gold prices continued to fall on Thursday, dropping nearly $7 in the short term after the initial US jobless claims data was released, reaching a low of $1812 before settling at $1817.36 per ounce.
Gold prices experienced their worst decline since 2016 on Wednesday, marking their eighth consecutive day of losses, as the possibility of US interest rates remaining high for an extended period dampened market sentiment.
SPDR Gold Trust, the world's largest gold exchange-traded fund, reported that its holdings fell to their lowest level since August 2019 on Wednesday, reflecting investor demand.
Edward Gardner, commodities economist at Capital Economics, stated: "Gold prices have indeed plummeted in recent weeks, and the main driver seems to be the rise in long-term US interest rates."
According to the CME Fedwatch tool, traders estimate a roughly 37% probability of the Federal Reserve raising interest rates again this year. Gold is highly sensitive to rising US interest rates, as this increases the opportunity cost of holding gold.
Gardner stated: "As the year-end approaches, we do believe that gold prices will appreciate next year, and we think the Fed will cut rates more than the market currently anticipates."
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