Losses of 1.7% for gold in the first week of the year

Gold closed the day with gains, recovering from a three-week low, boosted by lower-than-expected US labor market data. Despite today’s rise, however, the yellow metal ended its worst week in more than a month, amid the unfavorable monetary climate created by the Federal Reserve.

The US economy generated fewer jobs than expected in December, but unemployment fell to a multi-year low, much to the chagrin of investors. Meanwhile, wages continued to rise, extending the strong earnings of previous months.

These mixed figures, to some extent, indicate that labor shortages and the Omicron mutation of the coronavirus continue to be a brake on the labor market.

“The biggest concern for me is wage growth,” said Jeff Wright, chief investment officer at Wolfpack Capital.

“Looking at the data as a whole, if the Federal Reserve is more concerned about inflation, then this report is problematic,” he said. “If the Fed values ​​higher levels of employment and restores employment to more than 62.5%, then it is not.” “That’s why the reaction to gold was initially ‘silent’.”

The market is aware that the reduction of the Fed’s extraordinary asset purchase program is proceeding along with the tightening of monetary policy, however, “mixed indications create a bottom for the gold last”, he explains.

Gold and other precious metals have been pressed by the impending tightening of the Fed monetary policy, but it is no longer clear what impact the latest figures will have on the Fed’s decisions at its January 25-26 meeting.

At the moment, gold appears to be trading in the $ 1,750 to $ 1,825 range “until direction is set, mainly by policymakers,” Wright said. “The lack of direction from them is rather glaring and gold is not sure where to go,” he explains.

In this context, gold for February delivery strengthened on Friday by $ 8.20 or 0.5% and closed at $ 1,797.40 an ounce, after falling by 2% yesterday which led it to the lowest level since December 21.

Nevertheless, the yellow metal finished the first five days of the year with losses of 1.7%, which is its worst weekly performance since November 26, 2021, according to FactSet.

Silver for March delivery rose 22 cents, or 1%, to close at $ 22,409 an ounce, but also lost 4% during the week.

On the other metals, March delivery was up 1.3% at $ 4.41 a pound, closing lower at 1.2% for the week, while March delivery was up 2.6% at 1,921. $ 60 an ounce, completing 0.5% higher per week. In April, the April contract for platinum fell 0.4% today, to $ 956.50 an ounce, extending its weekly decline to 1%.