The monthly US jobs report was released on Thursday, and it had a significant impact on precious metals. US jobless claims fell to a 44-year low. Unemployment claims, which measure the number of individuals who filed for unemployment insurance for the first time during the past week, were at 223,000, much lower than analyst expectations of 243,000.
Optimism about these figures buoyed the US dollar. The US dollar rose a whopping 0.41% and touched a high of almost 102.2 during the day. The changes in the US dollar (UUP) affect precious metals. For example, an increase in the dollar enhances the cost of dollar-based assets for buyers from other countries, and prices can fall.
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Similarly, a fall in the dollar makes these assets more expensive, and their prices can rise. The weaker the US dollar gets, the easier it is for investors from other countries to invest in dollar-based assets such as precious metals. Precious metals and the US dollar are inversely correlated.
The correlation between gold (IAU) and the US dollar index is now -0.59, which means that about 43% of the time, gold and the dollar moved in opposite directions. Silver’s correlation with the US Dollar Index is also about -0.59.
As precious metals have retreated over the past few days, precious metal mining stocks have also suffered. Barrick Gold (ABX), Yamana Gold (AUY), IAMGOLD (IAG), and Alacer Gold (ASR) have all posted losses in the past few days due to the fall in precious metals.