The sharp drop in gold prices and concurrent rally in equities following the May U.S. jobs report on Friday reflect a misreading of economic fundamentals and will likely unwind, according to economist Peter Schiff. The longtime gold advocate said investors are overreacting to headline payroll figures while ignoring signs of underlying labour market weakness.
In a post on microblogging site X (formerly Twitter), Schiff wrote, "The stock market is the tail that wags the dog. The labor market is weak. But since the headline number in the May jobs report was not as weak as expected, the stock market rose. As a result, traders bought dollars and sold gold. Those trades will reverse as the headlines fade."
https://x.com/PeterSchiff/status/1931065516019548666
Stocks gain, gold slides
U.S. stocks closed higher on Friday, buoyed by a modest upside surprise in nonfarm payrolls, which showed 139,000 jobs added in May, ahead of consensus estimates of 130,000. April’s job gains were revised down to 147,000. The unemployment rate held steady at 4.2%, in line with forecasts.
The upbeat reaction sent the S&P 500 above the 6,000 mark for the first time since February 21, while technology stocks led gains and Tesla rebounded from its previous session’s losses.
The data also prompted traders to reassess the timeline for Federal Reserve rate cuts, with expectations now pointing to a single reduction in September, rather than an earlier move. This recalibration sent the dollar higher and weighed on gold.
Spot gold fell 1.27% to $3,310.58 an ounce on Friday, while U.S. gold futures dropped 1.23% to $3,309.50.
“Those trades will reverse”
Schiff, a vocal critic of Fed policy and fiat currency weakness, argued that markets are reacting to surface-level data while the broader picture remains fragile. “Those trades will reverse as the headlines fade,” he warned, suggesting that the rush into the dollar and out of gold will prove short-lived.
His latest remarks come just weeks after a separate post on X, in which he questioned why central banks around the world continue to accumulate gold rather than Bitcoin.
“If gold is the past and Bitcoin is the future, why are foreign central banks that are preparing for a future where the U.S. dollar is no longer the reserve currency, replacing their dollar reserves with gold and not Bitcoin?” Schiff asked in a May 27 post to his one million followers.
He has repeatedly pointed to record central bank bullion buying, now topping 1,000 metric tons annually, as evidence of deepening global distrust in the U.S. dollar and growing confidence in gold’s role as a long-term reserve asset.
Gold’s case remains intact
Despite recent price pressure, Schiff maintains that gold remains well-positioned amid geopolitical tensions, fiscal concerns, and an uncertain Fed path. He views the latest market reaction as a temporary divergence from long-term fundamentals, one that will fade as reality sets in.
Also read | Why are central banks choosing gold over Bitcoin? Peter Schiff revives debate amid record bullion buying
With the Federal Reserve set to meet later this month, all eyes will be on updated projections and commentary that could either reinforce or undermine the narrative driving recent trades. For Schiff, though, the message is clear: the market’s reaction to the jobs data is “misguided,” and gold’s rebound is only a matter of time.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
In a post on microblogging site X (formerly Twitter), Schiff wrote, "The stock market is the tail that wags the dog. The labor market is weak. But since the headline number in the May jobs report was not as weak as expected, the stock market rose. As a result, traders bought dollars and sold gold. Those trades will reverse as the headlines fade."
https://x.com/PeterSchiff/status/1931065516019548666
Stocks gain, gold slides
U.S. stocks closed higher on Friday, buoyed by a modest upside surprise in nonfarm payrolls, which showed 139,000 jobs added in May, ahead of consensus estimates of 130,000. April’s job gains were revised down to 147,000. The unemployment rate held steady at 4.2%, in line with forecasts.
The upbeat reaction sent the S&P 500 above the 6,000 mark for the first time since February 21, while technology stocks led gains and Tesla rebounded from its previous session’s losses.
The data also prompted traders to reassess the timeline for Federal Reserve rate cuts, with expectations now pointing to a single reduction in September, rather than an earlier move. This recalibration sent the dollar higher and weighed on gold.
Spot gold fell 1.27% to $3,310.58 an ounce on Friday, while U.S. gold futures dropped 1.23% to $3,309.50.
“Those trades will reverse”
Schiff, a vocal critic of Fed policy and fiat currency weakness, argued that markets are reacting to surface-level data while the broader picture remains fragile. “Those trades will reverse as the headlines fade,” he warned, suggesting that the rush into the dollar and out of gold will prove short-lived.
His latest remarks come just weeks after a separate post on X, in which he questioned why central banks around the world continue to accumulate gold rather than Bitcoin.
“If gold is the past and Bitcoin is the future, why are foreign central banks that are preparing for a future where the U.S. dollar is no longer the reserve currency, replacing their dollar reserves with gold and not Bitcoin?” Schiff asked in a May 27 post to his one million followers.
He has repeatedly pointed to record central bank bullion buying, now topping 1,000 metric tons annually, as evidence of deepening global distrust in the U.S. dollar and growing confidence in gold’s role as a long-term reserve asset.
Gold’s case remains intact
Despite recent price pressure, Schiff maintains that gold remains well-positioned amid geopolitical tensions, fiscal concerns, and an uncertain Fed path. He views the latest market reaction as a temporary divergence from long-term fundamentals, one that will fade as reality sets in.
Also read | Why are central banks choosing gold over Bitcoin? Peter Schiff revives debate amid record bullion buying
With the Federal Reserve set to meet later this month, all eyes will be on updated projections and commentary that could either reinforce or undermine the narrative driving recent trades. For Schiff, though, the message is clear: the market’s reaction to the jobs data is “misguided,” and gold’s rebound is only a matter of time.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
