Gold Prices Remain Steady Following Jobs Report

As of 3:30 PM Eastern standard time, gold prices remained relatively unchanged with the most active February futures trading down $2.50 to be currently fixed at $1250.60.

Spot gold is currently showing a small net gain of $1.50, currently fixed at $1240.30. Dollar strength has had a negative effect amounting to -$1.60, with buyers bidding up the precious yellow metal by $3.10.

Gold has been fighting an uphill battle, losing ground in the risk-on market environment that currently exists. Considering the dynamic growth in U.S. equities, a stronger U.S. dollar, and low inflationary expectations, gold prices have been steadily dropping since September of this year.

The U.S. equities markets, which really began to build steam immediately following the presidential election last November, have traded to a new record high on over 50 occasions. Basic liquidity theory states that money will follow the course of least resistance and highest profit potential.

The U.S. economy continues to be vibrant as seen in today’s U.S. jobs report. Exceeding initial expectations, U.S. employers added 228,000 jobs in November, with the unemployment rate pegged at 4.1%.

Waiting on The Fed

On Tuesday of next week, the Federal Reserve members will meet, holding the last FOMC meeting of the year. Since it’s widely expected that they will initiate one final rate hike in December, such an action is for the most part currently factored into market pricing.

What investors and market participants will be looking for is any information that will gain them insight into the Federal Reserve’s model (Dot Plot) regarding next year’s interest rates.

According to Fiona Cincotta, a senior market analyst at City Index, in an interview with MarketWatch, “Investors are increasingly concerned that the Fed could ease back on interest rate hikes next year, until hourly wages and inflation start to move more convincingly higher.”

Next week Bitcoin will begin to trade on the CBOE (Chicago Board Options Exchange), followed by the CME’s Bitcoin futures contract which will begin to trade on the 18^th of this month. It will be interesting to see what type of volume, liquidity, and open interest these contracts generate.

Wishing you as always, good trading,