Gold Prices Move Higher on Waning Rate Hike Expectations



Friday’s economic data

Gold futures for December expiration advanced on Friday, September 2, 2016. Gold rose 0.07% to close at $1,326.7 after touching the day’s high of $1,334 per ounce. Silver, platinum, and palladium also rose.

The rise in the precious metals was mainly attributed to the weaker-than-expected US jobs data that came out on that day. The US employment growth slowed more than expected in August after two straight months of robust gains, and wages were tepid. The unemployment rate was higher than the forecasted analyst expectation of 4.8%. The unemployment rate measures the percentage of the total workforce that is unemployed and actively seeking employment. The figure was at 4.9% in August.

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Revival of the mining funds and shares

The non-farm employment figures, which measure the change in the number of employed people excluding the farming industry, were lower than the expectation at 151,000. The lower the figure, the lower the outlook for the economy. Average hourly earning were also lower than the analyst expectation by 0.1%. This figure measures the change in the price businesses pay for labor excluding the farming industry.

The weaker-than-expected numbers from Friday pointed to a slowing US economy, which boosts the precious metals. The rise of the metals also increases the precious-metal-based funds like the iShares Gold Trust (IAU) and the iShares Silver Trust (SLV).

The mining shares that increased on Friday alongside the metals include Coeur Mining (CDE), Barrick Gold (ABX), and Cia De Minas Buenaventura (BVN). Together, the three miners make up about 10.7% of the price changes in the VanEck Vectors Gold Miners Fund (GDX).


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