Gold trades at new record highs above $3,600 as cooling labor market spurs haven demand

Outside Market Developments: The much-anticipated jobs report reflects ongoing cooling in the labor market, amid uncertainty on tariffs and the fiscal situation. Only 22k new payrolls were recorded in August, and there were back-month revisions totaling -21k. June was revised down to -18k, the first negative NFP print since the pandemic.

Weakness in the jobs data has likely sealed the deal for at least a 25-bps rate cut on September 17-Sep. There is now a 10% probability for a 50 bps cut.

Market focus now shifts to next week's inflation data. Median expectations are +0.3% m/m for both August CPI and PPI. At this point, we'd have to see a significant acceleration in inflation to raise doubts about a September rate cut. That seems unlikely.

I've suggested in recent commentary that some FOMC members may be inclined to assert the Fed's independence at the next meeting in the face of significant White House pressure to ease. I still think there is some risk, but less so in light of today's jobs data and the absence of any pre-blackout Fedspeak to temper dovish market expectations.

Nonfarm Payrolls rose 22k in August, well below expectations of +83k, versus a revised +79k in July (was +72k). The unemployment rate ticked up to 4.3% from 4.2% in July. Hourly earnings rose 0.3%, in line with expectations. The average workweek was unchanged at 34.2 hours.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$6.04 (+0.17%)
5-Day Change: +$150.94 (+4.38%)
YTD Range: $2,607.16 - $3,598.89
52-Week Range: $2,487.06 - $3,598.89
Weighted Alpha: +44.81

Gold surged to new record highs above $3,600 after a second month of weak jobs data spurred haven interest. The yellow metal is poised for a third straight higher weekly close.



Signs of further labor market cooling boosted September rate cut expectations, weighing on yields and the dollar. This provided additional lift for gold.

The $3,601.32 Fibonacci objective was satisfied and slightly exceeded. The next levels to watch on the upside are $3,700 (psychological), $3,730.44 (Fibonacci), and $3,743 (measuring objective).

Minor support at $3,578.40/73.70 protects the intraday low at $3,540.30. Thursday's corrective low at $3,512.35 will be an important level to watch in the week ahead.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.069 (+0.17%)
5-Day Change: +$1.346 (+3.39%)
YTD Range: $28.565 - $41.459
52-Week Range: $27.732 - $41.459
Weighted Alpha: +50.28

Silver is trading higher, buoyed by fresh all-time highs in gold, more dovish Fed expectations, and a softer dollar. The white metal is underperforming, as the weaker jobs picture suggests potential for diminished industrial demand. Nonetheless, silver is still up more than 3% this week and will record a third straight higher weekly close.



Important resistance at $41.513/$41.610 was approached on Wednesday, but was left intact. This area must be cleared to lend credence to the extended bullish scenario and put record highs around $50 in play.

Today's intraday low at $40.558 stands in front of Thursday's corrective low at $40.413. Additional support is noted at $40.148 down to $40.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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