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Gold slid as much as 2.3% on Thursday as better-than-expected U.S. employment and service sector data propelled the dollar higher and boosted expectations that the strong economic readings may reignite taper talk from the Federal Reserve.

·         Bullion’s retreat also spilled into other precious metals, with silver slipping as much as 4.3% and platinum shedding 3.7%.

 

·         Spot gold was down 1.9% at $1,871.91 per ounce by 1:43 p.m. EDT (1743 GMT), after falling to its lowest level since May 20 at $1,864.39.

 

·         U.S. gold futures settled down 1.9% at $1,873.30.

 

·         “We’re coming out of the woods here, the data is getting better, there are some inflation issues that could put a damper on things, but we have turned the corner,” Bob Haberkorn, senior market strategist at RJO Futures, said.

 

“The better-than-expected data has put traders on the defense. They’re preparing for possible statements from the Federal Reserve on tapering or higher rates, although not immediately.”

 

·         The dollar index jumped 0.7%, making gold expensive for other currency holders, while the U.S. yields also ticked up.

 

·         Signaling a strong labor market recovery, new U.S. jobless claims dropped below 400,000 last week, while private employers stepped up hiring in May, the ADP National Employment Report showed.

 

·         Meanwhile, a measure of U.S. services industry activity increased to a record high in May.

 

·         “A much stronger-than-expected ADP result suggesting a similar bounce back in payrolls tomorrow after last month’s terrible print has driven the dollar notably higher and triggered long liquidation in gold under $1,890,” said Tai Wong, head of metals derivatives trading at BMO.

 

“The $1,850-60 support is significant and should hold in gold.”

 

·         The focus now turns to key U.S. nonfarm payroll numbers due on Friday.

 

·         Silver fell 2.9% to $27.39 per ounce and platinum slipped 2.7% to $1,156.96 after sinking to its lowest level since late March, while palladium shed 1.2% to $2,821.55.

 

·         U.S. weekly jobless claims below 400,000; companies boost hiring in May

The number of Americans filing new claims for unemployment benefits dropped below 400,000 last week for the first time since the COVID-19 pandemic started more than a year ago, pointing to strengthening labor market conditions.

That was underscored by other data on Thursday showing private payrolls increasing by the most in 11 months in May, spurred by robust demand amid a rapidly reopening economy. The data supported expectations that job growth accelerated last month, though shortages of workers and raw materials continue to loom over the labor market recovery.

Initial claims for state unemployment benefits fell 20,000 to a seasonally adjusted 385,000 for the week ended May 29. That was the lowest since mid-March 2020. Economists polled by Reuters had forecast 390,000 applications for the latest week.

The fifth straight weekly decrease in claims was led by Texas and Florida.

There were about 15.4 million people on unemployment benefits under all programs in mid-May.

 

·         The Federal Reserve's "Beige Book" report of anecdotal information on business activity collected from contacts nationwide showed on Wednesday that "it remained difficult for many firms to hire new workers, especially low-wage hourly workers, truck drivers, and skilled tradespeople."

 

·         Companies hired nearly a million new workers in May, ADP says

Private job growth for May accelerated at its fastest pace in nearly a year as companies hired 978,000 workers, according to a report Thursday from payroll processing firm ADP.

It was a big jump from April’s 654,000 and the largest gain since the 4.35 million added in June 2020 as the national economy came out of its Covid-19 lockdown. Economists surveyed by Dow Jones had been looking for 680,000 in May.

The April total was revised sharply lower from the initially reported 742,000.

ADP’s private payroll count, done in conjunction with Moody’s Analytics, serves as a precursor to Friday’s more closely watched nonfarm payrolls data from the Labor Department. However, the two numbers can differ substantially, as they did in April when the official count showed just 266,000 new jobs compared with expectations of a million.

 

·         U.S. service sector index at record high in May; input costs soar - ISM survey

A measure of U.S. services industry activity increased to a record high in May amid robust demand as the economy moves toward fully reopening, but businesses are struggling to source raw materials and labor, driving up production costs.

 

The Institute for Supply Management (ISM) said on Thursday its non-manufacturing activity index rebounded to 64 last month, the highest reading in the series’ history, from 62.7 in April.

 

·         May jobs data expected to be strong, and could add to Fed debate on tapering bond buying

 

·         Biden order bans investment in dozens of Chinese defense and tech firms

President Joe Biden signed an executive order on Thursday that bans U.S. entities from investing in dozens of Chinese companies with alleged ties to defense or surveillance technology sectors, a move his administration says expands the scope of a legally flawed Trump-era order.

The Treasury Department will enforce and update on a "rolling basis" the new list of about 59 companies, which bars buying or selling publicly traded securities in target companies, and replaces an earlier list from the Department of Defense, senior administration officials told reporters.

The order prevents U.S. investment from supporting the Chinese military-industrial complex, as well as military, intelligence, and security research and development programs, Biden said in the order.

 

·         Oil steady after mixed U.S. inventory report

Oil prices were little changed on Thursday, following two straight days of gains that took oil futures to highs not seen in a year, after weekly U.S. crude stocks fell sharply while fuel inventories rose more than expected.

Brent futures for August delivery fell 23 cents to $71.12 a barrel, a 0.3% loss. U.S. crude fell 14 cents to $68.69 per barrel.

Brent crude touched its highest since September 2019 at $71.99 earlier in the session. WTI prices rose as high as $69.40, strongest since October 2018, after gaining 1.5% in the previous session.

U.S. crude inventories fell by 5.1 million barrels last week, compared with expectations for a decrease of 2.4 million barrels, while gasoline stocks grew by 1.5 million barrels and distillate stockpiles jumped by 3.7 million barrels.

 

·         Banks bulk up in Hong Kong as China business overshadows politics

 

·         CORONAVIRUS UPDATES:

·         White House lays out plan to share millions of Covid doses with poorer nations

·         Biden outlines plan to quickly share 25 mln COVID-19 vaccines with world

·         U.S. says to make COVID-19 vaccines available to India

·         IMF and World Bank urge G7 to release surplus vaccines

·         Chile halts second dose, ups minimum age for AstraZeneca vaccine after blood clot report

·         Slow to start, China now vaccinating against Covid at a staggering pace