(Kitco News) - Gold and silver prices are posting modest gains in early U.S. trading Friday, following the U.S. jobs report for February that showed a big miss to the downside on non-farm payrolls. Some safe-haven demand is also featured amid the Iran war that has elevated risk aversion in the general marketplace. April gold was last up $49.00 at $5,128.00. May silver prices were up $1.934 at $84.10.
The U.S. economy lost 92,000 non-farm payroll jobs in February, marking a sharp slowdown from the strong downwardly revised 126,000 increase recorded in January. The unemployment rate rose to 4.4% versus expectations for a rate of 4.3%. This report falls squarely into the camp of the U.S. monetary policy doves, who want to see U.S. interest rate cuts coming sooner.
In overnight news, gold is being offered at a discount in Dubai due to the war in the Middle East grounding flights and hampering suppliers' ability to move bullion out of the key trading hub. Traders are offering discounts of as much as $30 an ounce to the global benchmark in London, as many buyers have stepped back from new orders due to high shipping and insurance costs. The disruption to gold shipments from Dubai is affecting buyers in India, but near-term demand is relatively muted and inventories are swollen by a large volume of imports in January.
Latest on the war in Iran…
-- Qatar: Iran attacks navy in Bahrain-based GCC ops center
--Strait of Hormuz ostensibly closed
--Qatar warns it will not resume crude oil production until fighting stops
--Brent resumes gains, trades over $86 a barrel
--U.S. lets India buy some Russian oil, signals move to calm energy markets
--Trump tells NBC he wants to replace Iran leadership structure
--Israel carries out airstrikes; Iran targets Middle East countries
--Sri Lanka lets Iran navy ship dock after sinking of Dena
-- Maersk suspends more container ship services due to risks
-- Emerging currencies, equities set for worst week since pandemic
U.S. gasoline prices at the pump jump to highest levels in 2.5 years. U.S. gasoline pump prices advanced to the highest level since September of 2024 as the conflict in the Middle East disrupts energy supplies from that region. The retail price of U.S. gasoline rose to $3.32 a gallon on Thursday, according to the American Automobile Association and as reported by Bloomberg. Gasoline futures have also rallied 27% this week and are on track for the biggest weekly advance since March 2022. Asian refiners have been cut off from critical supplies of crude that typically flow through the Strait of Hormuz, prompting some to consider cutting runs. China has told its largest refiners to suspend diesel and gasoline exports. The Middle East disruption also comes as U.S. refiners switch from producing winter-grade gasoline to more expensive gasoline, an annual transition that typically pushes prices up in the spring.
Markets price in 100% chance of ECB interest rate hike this year. There’s a 100% chance the European Central Bank will raise its interest rates this year, according to money markets. “That’s a dramatic turnaround from a week ago, when a cut was viewed as more likely than a hike. The shift is sending German government bonds toward their worst week in three years, with yields on rates-sensitive two-year notes up 30 basis points since last Friday’s close at 2.30%. The rapid change of expectations is reflected in markets around the world. In the U.S., options traders are increasingly betting that the Federal Reserve will forgo any rate cuts this year. The yield on 10-year Treasuries has soared more than 20 basis points to 4.17%, with the rate on Australian, Canadian and U.K. peers climbing by a similar margin,” Bloomberg reported today. The euro zone is especially vulnerable to energy shocks because it imports oil and gas from the U.S. and Middle East. “The big fear now is that the war causes a rerun of 2022, when Russia’s invasion of Ukraine sent energy prices soaring, leading to an inflation spike that lasted for longer than policymakers expected,” said Bloomberg. Meantime, the Bank of Japan April rate hike odds are now 50/50, said a former BOJ official.
The key outside markets today see the U.S. dollar index slightly down, with Nymex crude oil prices solidly higher, at a two-year high, and trading around $85.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.12 percent.
Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.
Technically, April gold futures bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $5,434.10. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $5,000.00. First resistance is seen at $5,200.00 and then at $5,250.00. First support is seen at $5,000.00 and then at $4,900.00. Wyckoff's Market Rating: 7.0.
May silver futures bulls see their next upside price objective is closing prices above solid technical resistance at this week’s high of $95.86. The next downside price objective for the bears is closing prices below solid support at the February low of $71.815. First resistance is seen at $85.00 and then at $87.50. Next support is seen at $80.00 and then at this week’s low of $78.06. Wyckoff's Market Rating: 5.5.
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