ETFs

Dismal Job Report Drops Dollar, Lifts Precious Metals

Median estimates saw the US adding 733,000 jobs in August. But today’s report revealed that only 235,000 jobs were added.

The dollar fell immediately after the report was issued, boosting gold to a four-week high of $1,820.46, with futures jumping 1.1% to $1,831.80. Other precious metals also saw a lift, with silver rising 2.1% to $24.41 per ounce. Platinum was 1% higher at $1,002.90 while palladium climbed 0.3% to $2,407.00.

"The market is consolidating ahead of important non-farm payrolls report. The consensus is somewhere around 760,000 jobs, and a figure below 650,000 would be very bullish for gold," independent analyst Ross Norman said to Reuters before the release of the report.

Bullion has had a sluggish summer amid a global economic recovery from COVID-19. With investors seeing the possibility of central banks diminishing monetary stimulus, the yellow metal has struggled to gain traction despite overall market uncertainty.

The report is likely to drive gold prices up, as concerns about the delta variant and a weakened recovery will reduce the dollar's strength and raise inflation alarms. This new data point could help set up a fourth-quarter recovery for gold. The Fed plans to meet on September 24th, with additional economic data being released around then.

Investors looking for ETF options in gold can look at the Sprott Physical Gold Trust (PHYS). Sprott also has the Sprott Physical Silver Trust (PSLV) available for investors looking at silver exposure. With economic turmoil likely in the foreseeable future, precious metal exposure can protect a portfolio from multiple possible woes.

In late August, a report from the World Gold Council said, “Looking at other commodities, some can be considered luxury goods, some have technological applications, and some are basic everyday products. Some are used to hedge against inflation, some protect against currency devaluation, and all provide a degree of diversification in an investment portfolio. However, only gold performs all these functions.”

For more news, information, and strategy, visit the Gold & Silver Investing Channel.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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