Weakened USD Failed to Support Precious Metals

Despite a weakening USD, dovish comments by Fed Governor Tarullo, and an urging by the IMF that the FOMC hold off any rate hike(s) until 2016, precious metals continued to probe lower yesterday as nearby support levels were breached. This morning’s highly anticipated U.S. employment report for May was a shocker by how strong it was. Economic consensus was for 225,000 new jobs being created in May, but data showed that 280,000 jobs were created which is the best showing since last December. The data also included upward revisions for job growth in March and April. As expected, the USD is rallying sharply, bonds are selling off with the yield on the 10-year bond now above 2.40 percent, crude oil and most other commodities are sharply lower as talk of a rate hike sooner rather than later gains momentum yet again.

<p>Our market is lower across the board but certainly not in a free fall as much of the speculative selling and long liquidation may have been done earlier in the week. Gold is bouncing a bit off the intraday low of $1,162.10 as physical demand is picking up. Look for support in the mid-$1,150.00s with a break below $1,150.00 likely signaling that a test of $1,125.00 will be seen. Silver, which has traded below $16.00 earlier this morning, is back above that level as physical demand is very strong.


<p>Have a good weekend,