US Jobs Report Sees Gold Prices Rise & Dollar Slide

Commodity and currency markets typically waver a modest amount due to a number of different factors, regularly seeing online trading values move up or down with the release of new information. Most recently, a report on the U.S. employment situation had an affect on the price of gold and the strength of the dollar, seeing the two move in opposite directions.

The latest jobs report released by the professional services provider ADP showed that employment figures missed estimates – even though private sector jobs grew in number – which caused an increase in the precious metal’s price but a decrease in the greenback’s value, according to Reuters. During the Wednesday, April 1 trading session, spot gold climbed 2.2 percent to a high of $1,208.90 per ounce. Gold futures for June delivery also enjoyed a significant uptick, finally resting at $1,208.20 after having gained 2.1 percent during the day. Meanwhile, the dollar fell 0.2 percent against a number of currencies.

Industry experts largely point toward the ADP report as the cause of the greenback’s recent drop. With another national report concerning employment due out on Friday, April 3, some have been wondering how the current labor market conditions will affect markets heading into next week. 

“There is so much discord in the U.S. data that is difficult to find what exactly the next report is going to be,” Hamza Khan, senior strategist ING Bank told the news source. “It’s the uncertainty that pushes people towards safe-haven assets such as gold.”

Many unsure of what data upcoming report will contain
Of course, only a select few know what details the forthcoming report will contain, so the rest have been left to speculate.

Reuters reported that strong U.S. jobs data could serve to bolster bets that the Federal Reserve will implement interest rate hikes sooner rather than later, which could see the opportunity cost of holding non-yielding gold heighten. On the other hand, the dissemination of less-than-stellar employment figures could support beliefs that an appreciable rate hike won’t be put into effect until next year. The precious metal is sensitive to swings in U.S. interest rates, which also affect the strength of the dollar, so many are curious as to what Friday’s report will show. 

“There’s a lot of concern about the employment report that’s coming out on Friday, that it might be worse than expected,” Phillip Streible, senior commodities broker at RJO Futures, told the news source. “Because of that, traders are positioning themselves with some safety ahead of the report.”

Latest dip in oil prices caused reduction in job opportunities
While investors look toward Friday’s report, the latest jobs figures were likely affected by the falling value of oil – as cheaper gasoline prices has caused employment cutbacks in some oil-producing states, USA Today noted. With more layoffs likely to come, planned oil industry dismissals have totaled nearly 100,000 in the past four months alone. Since December, around 91,000 energy-related job cuts have been made, mostly in the Midwestern states of North Dakota, Texas, Oklahoma and Louisiana. Many of the lost jobs came from oil exploration and production companies, as well as oilfield services providers and manufacturers. 

Two of the largest natural gas producers – BP and Chevron – have announced that they plan to reduce their workforces by 10,000 jobs this year, while manufacturers who produce aspects of the industry’s infrastructure are considering approximately 11,700 layoffs, the newspaper reported. In North Dakota, the number of active drilling rigs declined from 194 a year ago to its current total of 96.

At the same time, lower oil prices may have precipitated these declines, though, they could also spur economic growth, as consumers are likely to spend more on other goods with the money that save on gas, according to USA Today. In fact, so far this year, the average monthly job growth has been 270,000 – up from the 260,000 monthly average observed in 2014. 

As prices for gold and oil fluctuate, and the strength of the greenback changes almost daily, now is a great time for individuals interested in online trading to get started. With the right information – and discipline – investors stand to make money by trading within the commodity and currency markets. It’s never too late to start learning trading basics, set up a brokerage account and get involved.