Good Jobs Numbers Hit Gold

The Market Gage - Gold Silver Market Insights

Unemployment rate now 3.9 percent lowest in 18 years. The average hourly wage rose by 2.6 percent year over year indicating a continuation of a growing economy. Initial jobless claims on the state level hit 211,000 during the last week of April, that’s the lowest since March, 1973.

Overall, the country is now considered at full employment.

Will this information be enough for the Fed’s to take a hawkish stance and be more aggressive raising rates?

Both the Equity Markets and the price of Gold seem to believe that and turned red after the report was released this morning.

It now seems that there is no news that can put a charge in the price of Gold. Silver holding up much better as an industrial metal.

The Wall Street Gold traders I spoke with are standing firm with their prediction that we will see new lows in the price of Gold shortly. Possibly they are just talking their book, but with a stronger dollar I can’t say I disagree with them.

In my opinion there are two things right now that are stalling a dramatic decline in the price of Gold. First and most important, is the declining Ten-Year Treasury Yields. I would bet if we were over three percent right now and not at 2.92 percent you would see the price of Gold below $1,300. So that’s good news for the longs. The second thing is that currently there is not enough professional trading interest in the market. Heavy hitters like banks and trade houses have no interest in a market with limited upside potential.

So we just sit here watching the activity in the dollar and in the treasury market waiting for something to trade on.

A report released Wednesday in the Financial Times revealed that the Eurozone’s economic expansion has decelerated to its slowest pace in 18 months, raising concerns about the impact of trade tensions, a stronger currency and capacity constraints on the region’s longer term prospects.

Data for the first quarter of this year confirms fears of a slowdown in the Euro zone arena after a stronger than expected 2017.

There are some traders expecting the Euro to start declining after appreciating more than 14 percent in 2017. German and French PMIs have weakened and manufacturing exports have declined
as U.S. manufacturing picks up steam.

If the Euro reverses its most recent trend and heads lower this should fuel the U.S. dollar further putting more pressure on the price of Gold.

Have a wonderful Friday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.