Gold Futures Drop $73 This Week, After Reaching a New Record-high Price

Gold Prices Plummet as Jobs Report Defies Expectations

Gold prices plunged this week, giving up almost $75 per ounce. This occurred after hitting the highest value on record when gold traded to approximately $2153 on Monday, only to close over $100 below the new record high at $2048. Although two out of the five trading days this week resulted in gains (Wednesday and Thursday), these gains were tepid at best. Today, traders witnessed another deep daily double-digit decline.

As of 4:05 PM EST gold futures basis the most active February 2024 contract has declined by $26.20, or 1.28%, and is currently fixed at $2019.10. Dollar strength was evident this week, except for yesterday’s decline in the dollar index. Currently, the dollar has gained 0.33% taking the index to 104.04.

With gold declining by approximately 1.3%, dollar strength today was not the predominant factor driving the selloff. Rather, it was market participants actively selling after the release of the jobs report which came in above forecast by economists. Economists polled by Dow Jones were anticipating that today’s jobs report for November would come in at approximately 190,000 new jobs added last month. The actual number was slightly higher, coming in at 199,000. Although the estimates were fairly close to the numbers revealed, the fact that they came in just under 200,000 indicates that the labor market is not contracting as quickly as the Federal Reserve had hoped it would.

November Inflation Report and The Fed’s Last FOMC in 2023

Next week, members of the Federal Reserve will convene for the last Federal Open Market Committee (FOMC) meeting of 2023. It is widely expected that they will continue to maintain current benchmark interest rates between 5 ¼% and
5 ½%.

Concurrently, on the first day of the FOMC meeting (December 12), the BLS will release the CPI (Consumer Price Index) report for November. While inflation in the United States is still well above the Fed’s 2% inflation target, inflation has been steadily declining since the Fed began its restrictive monetary policy, raising rates at 11 consecutive FOMC meetings beginning in March 2022. According to economists polled by FactSet, next week’s CPI report will likely reveal that inflation rose 3.2% in November year-over-year.

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Wishing you as always good trading,

Gary S. Wagner