Metals Stocks: Gold suffers first loss in 4 sessions as traders weigh ‘mixed bag’ U.S. jobs report

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Gold prices finished lower on Friday, suffering their first loss in four sessions, after the U.S. government reported only modest growth in September U.S. employment, but revealed that the nation’s unemployment rate dropped to its lowest level in 50 years.

“The 136,000 increase in non-farm payrolls in September illustrates that while growth in employment (and broader activity) has slowed, it is not collapsing,” said Paul Ashworth, chief North American economist at Capital Economics, in a note. “Otherwise, the employment report was something of a mixed bag – with the unemployment rate dropping to a 50-year low, while average hourly earnings were stagnant on the month.”

The U.S. unemployment rate dropped to 3.5%, the lowest rate since December 1969.

Still, the “mixed” U.S. jobs data “give enough cover” for the rate-setting Federal Open Market Committee to proceed with a quarter percentage point interest-rate cut at the end of October, said Jeff Wright, executive vice president of GoldMining Inc.

The report “was good on surface, but concerning deeper down,” said Wright, adding that “the additional jobs added in services were offset by decrease in manufacturing.” The “FOMC will lower rates to avert further weakening of U.S. economy and to also decrease value of [the] U.S. dollar to not fall further behind on export competition,” he said.

Against that backdrop, December gold GCZ19, -0.07% on Comex fell 90 cents, or 0.06%, to settle at $1.512.90 an ounce after posting three consecutive session gains. Most-active futures contract prices rose about 0.4% for the week, according to FactSet data.

December silver SIZ19, -0.37%  gave up 5.1 cents, or 0.3%, at $17.625 an ounce, with prices ending down nearly 0.2% for the week.

For now, “the data-dependent Fed has enough ammunition to commit to another rate cut, but they could still hold off on committing to an easing cycle,” said Edward Moya, senior market analyst at Oanda.

Powell on Friday afternoon, speaking at an event sponsored by the Fed in Washington, D.C., sounded upbeat about the economy, but noted its facing some risks and challenges. “Overall [the economy] is – as I like to say- in a good place.”

Earlier Friday, Boston Fed President Eric Rosengren said the soft economic data earlier this week shouldn’t have been such a surprise. He also said data are still consistent with the economy slowing only modestly, to around a 1.7% annual rate over the second half of the year.

Fed Vice Chairman Richard Clarida in an interview with the Wall Street Journal late Thursday said there was low chance of an economic recession in the U.S., despite the weak data that have emerged.

The nonfarm-payroll report Friday followed economic data that has come in at the weakest level in years. A survey on the service sector for September showed the weakest pace of growth in three years, dropping to 52.6% in September from 56.4%. That fueled haven demand for gold along with other lackluster reports, including one on manufacturing, underpinning doubts about U.S. economic stability in the face of slack economic data abroad.

On Comex, December copper HGZ19, +0.29%  rose 0.4% to $2.5625 a pound, but was down about 1.4% for the week. January platinum PLF20, -0.89%  settled at $886.90 an ounce, down 0.8% for the session, losing 5.3% for the week, while December palladium PAZ19, +0.91%  added 0.8% to $1,642.40 an ounce, ending down 0.6% from a week ago.

Read: A sharper downturn in global growth threaten’s palladium’s record run

The SPDR Gold Shares exchange-traded fund GLD, -0.05%  edged up by 0.1%, poised for a weekly rise of 0.7%.