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Gold rebounded from an over two-week low hit on Friday after a rise in U.S. non-farm payrolls fell short of expectations. U.S. employers boosted hiring in May and raised wages as they competed for workers, with millions of unemployed Americans at home likely because of childcare issues and generous unemployment checks. The Labor Department’s closely watched employment report offered some assurance that the economic recovery from the pandemic recession was on track after worker shortages also blamed on lingering fears over COVID-19 sharply restrained employment growth in April.

Unemployment is down and wages are up, President Joe Biden said, as his administration touted a jobs report that left some economists concerned about the state of the American labor market. "This is historic progress," Biden said in a speech. "None of this success is an accident. It isn't luck." The Labor Department's closely watched employment report on Friday showed 559,000 nonfarm jobs created last month, with wages rising, though millions of unemployed Americans remained at home.

Partly reflecting the positive effects of increased Covid-19 vaccination rates and relaxed social distancing measures, the Federal Reserve's Beige Book said the U.S. economy increased at a somewhat faster rate from early April to late May. The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, still described the pace of economic growth as moderate. The Fed said the effects of expanded vaccination rates were most notable in consumer spending, as increased leisure travel and restaurant spending augmented ongoing strength in other spending categories.

Indian gold dealers offered the biggest discounts in 8-1/2 months this week as COVID-19-related restrictions stifled consumption, while top consumer China flipped to a discount for the first time since late January. Dealers offered discounts of up to $12 an ounce, the highest since mid-September 2020, over official domestic prices inclusive of 10.75% import and 3% sales levies versus $10 discounts last week. China's central bank on June 1 issued a revised draft anti-money laundering law, covering accounting firms and precious metal exchanges.

The Perth Mint's gold sales fell to a four-month low in May, the refiner said, as an uptick in prices of the metal dented demand for minted products. Sales of gold coins and minted bars fell to 91,146 ounces in May, down 10% month-on-month, but 44% higher than a year earlier. Sales of silver products in May also registered a 5.4% sequential decline to 1.7 million ounces, though it jumped nearly 71% from a year earlier.

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Energy

Crude oil rose amid optimism over improving demand and on OPEC+ supply discipline. Slow progress of the Iran nuclear talks also offered some support. The Organization of the Petroleum Exporting Countries (OPEC) and its allies have predicted a solid demand in recovery in the United States and China, the world's two biggest oil consumers, but stuck to their plan to ease supply controls gradually.

Russia's compliance with the OPEC+ oil output deal was at close to 100% last month, much higher than it was in April, Russian Deputy Energy Minister Alexander Novak said. Russian compliance in April was at 91%, according to OPEC. Russian Deputy Prime Minister Alexander Novak said it was premature to talk about output decisions due to be made by the so-called OPEC+ group of oil producers in August. Novak said the group would look at seasonal demand growth and also consider the potential return of Iranian oil supplies to the market.

U.S. crude stocks fell last week as refineries hiked output, while gasoline stocks increased and distillate inventories rose, the Energy Information Administration said. Crude inventories fell by 5.1 million barrels in the week ended May 28, compared with expectations for decrease of 2.4 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 784,000 barrels, EIA said. Refinery crude runs rose by 358,000 barrels per day, EIA data showed. Refinery utilization rates rose by 1.7 percentage points.

Natural gas rose after midday forecasts called for hotter weather over the next two weeks than previously expected. Traders said they expect that extra heat will prompt power generators to burn more gas to keep air conditioners humming.

The number of rigs drilling for gas in the United States this week fell by one to 97. That put the gas rig count down for a fourth week in a row for the first time since May 2020 as drillers focus more on improving cash flow, paying down debt and returning money to shareholders rather than increasing output. With warmer weather coming, Refinitiv projected average gas demand, including exports, would rise from 84.6 bcfd this week to 88.0 bcfd next week and 89.7 bcfd in two weeks.

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Base Metals

Copper prices dropped as weak demand in top consumer China outweighed a supply threat in the Americas. China's appetite for overseas metal is fading, with Yangshan copper import premiums falling to $28.50 a tonne, the lowest since at least 2012. PMI surveys showed that China’s services sector expansion slowed in May, though factory activity grew at the fastest pace this year.

Production at BHP’s Escondida, the world’s biggest copper mine, dropped 16.5% year-on-year to 85,700 tonnes in April, while output at Codelco’s copper mine fell 0.5% to 132,700 tonnes, Chile’s copper commission said. Botswana's new copper mine Khoemacau aims to start production at the end of this month with first sales expected in the third quarter of the year, its chief executive said.

Pressure also seen after strong U.S. jobs data fuels concerns that monetary policy could tighten. The dollar rose after stronger-than-expected U.S. jobs data that suggested an improving labor market, reinforcing signs that the world’s largest economy was on its way to a steady path to recovery from the pandemic. U.S. private payrolls increased by 978,000 jobs in May, the ADP National Employment Report showed, the biggest increase since June 2020.

According to the Beige Book survey of the Federal Reserve, the pace of economic recovery in the US moderately accelerated in April and May, and the overall price pressure further increased. It is planned to gradually reduce the corporate credit tools for the COVID-19. European Commission said that Fiscal policy need to be supportive in 2021 and 2022, and countries should avoid launching support too early. China's PPI and CPI scissors may give the central bank a longer window phase to avoid using monetary policy tools.

China's service sector growth moderated in May as activity and new order growth softened since April. The Caixin services Purchasing Managers' Index dropped to 55.1 in May from a four-month high of 56.3 in April. Business activity as well as new orders rose sharply in May, despite rates of expansion softening since April. Customer demand continued to expand due to the successful containment of COVID-19 in China, while there were also reports of new product offerings boosting sales.

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