Metals Stocks: Gold inches higher as investors wait for U.S. employment data

Thursday’s modest gains for gold and silver came amid tumbling stock markets, rising Treasury yields and a surging dollar, with investors spooked over fears the Federal Reserve may not be able to get inflation under control without triggering an economic slowdown.

Stocks earlier had rallied on Wednesday after the Fed’s as-expected 50 basis point interest rate hike, and a perception by investors that the central bank was less hawkish than markets believe.

The Fed hike was followed on Thursday by the Bank of England raising interest rates for the fourth time and by a bleak economic forecast that triggered a plunge in the pound GBPUSD, +0.08% and surge in the dollar. The European Central Bank is also expected to raise rates in July. The Bank of England’s gloom contrasted with the Fed’s position that it can keep a recession at bay.

“While Fed Chair Jerome Powell mentioned in his comments that followed the rate decision that the bank is not “actively considering” increases of 75 basis points, further hikes of 50 basis points are highly likely in the coming months,” said Rupert Rowling, market analyst at Kinesis Money, in a note to clients.

“Gold is struggling to gain traction in this environment of rising interest rates and now looks set for a sustained period below $1,900 an ounce. While the bullish support of the ongoing war in Ukraine will limit how far gold declines, this is currently outweighed by the bearish driver of central banks tightening their monetary policy-making non-yield bearing assets such as gold less attractive,” he said.

U.S. stock index futures ES00, -0.46% YM00, -0.32% NQ00, -0.63% were modestly lower on Friday, while the dollar DXY, -0.45% was giving back some ground and Treasury yields rose slightly.

Investors were waiting for U.S. April nonfarm payrolls data, which is expected to show a gain of 400,000, from a 431,000 rise in the prior month, according to a survey of economists from Dow Jones and The Wall Street Journal. Hourly labor costs will also be in focus.

In other metals trade, July copper  HGN22, -0.14% slipped 0.1% to $4.286 a pound.

July platinum  PLN22, -2.72% fell 2.7% to $947 an ounce, while June palladium  PAM22, -2.13%  fell nearly 2% to $2,134 an ounce.