Gold rally takes a pause on its way to a higher trading range

By Myra P. Saefong

Gold prices fall for the session while clinging to a gain on the week

Gold futures edged lower on Friday, pressured by strength in the U.S. dollar following a stronger-than-expected September jobs report - with one analyst calling the metal's move more of a "pause" as prices look to gear up for another rally.

"The big upside surprise in the jobs report nixed market hopes of a half-point cut" by the Federal Reserve at its next meeting, said Brien Lundin, editor of Gold Newsletter. That lifted Treasury yields and the dollar, while sending gold sharply lower in the "typical inverse fashion."

Gold briefly moved up in an "impressive rebound," he said, but have since fallen back.

Gold for December delivery (GC00) (GCZ24) was down $10.40, or 0.4%, at $2,668.40 an ounce on Comex on Friday, after seeing intraday trading between a low of $2,651.60 and high of $2,690.60. Based on the most active contract, prices were trading just a few cents higher than the $2,668.10 settlement from a week ago.

The U.S. economy created 254,000 new jobs in September, according to Friday's labor report. Economists had predicted a 150,000 increase in new jobs in September after seasonal adjustments. The unemployment rate, meanwhile, slipped to 4.1% from 4.2%.

Gold prices initially declined in the wake of the data in what Lundin referred to as "merely the latest in a string of fairly weak performances over the past week or so, since the price set another all-time high on September 26."

Gold futures settled at a record-high $2,694.90 on Sept. 26, also touching an all-time intraday high of $2,708.70.

"Pulling back to look at the bigger picture, however, we see that this price weakness appears to be just the latest in a series of pauses the market has experienced in this new bull run that began at the end of February," Lundin told MarketWatch. "In each instance, gold fell or traded sideways for a week or two before taking off on a new rally to a higher trading range."

That's likely to be the case in this instance, he added, "as the steep rise in federal debt, and the costs of servicing that debt, continue apace."

That's one of the primary reasons why the Fed is intent on cutting rates, even as many economic data points remain positive, said Lundin.

-Myra P. Saefong

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10-04-24 1302ET

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