Gold Rises On Data Uncertainty

Superficially, it seems that equities fell because of yet more mixed data coming from the American economy. It’s a bit more nuanced than that.

Analysts were expecting the ADP private employment report to clock in at about 225,000 new jobs created. It came in at a respectable but disappointing 189,000.

However, growth in the U.S. manufacturing sector rose to a five-month high in March as output and employment gained. Markit, the company that produces such surveys, said its final Manufacturing Purchasing Managers’ Index rose to 55.7 in March from 55.1 in February.

Our bet is that the selloff is tightly connected to the end of month/end of quarter rebalancing that we noted yesterday. Further, we’re looking at the release of earnings reports for the first quarter to be issued as we head into April. Our take on those is that we will see some good, many bad and a handful of really ugly.

There is also considerable softness in Japan and China, which may be clutched in a death grip with one another.

Gold took advantage of the unsettled stock markets driven down by shaky data and a weaker dollar to move substantially higher.

"There is so much discord in the U.S. data that is difficult to find what exactly the next report is going to be. It's the uncertainty that pushes people towards safe-haven assets such as gold," senior strategist Hamza Khan of ING Bank said.

West Texas Intermediate crude oil served as an appreciable outside market force for gold, jumping 5%+ on a lower-than-expected U.S. stock build. Brent North Sea is up around 3.5%.

We expect quiet markets tomorrow because of the short week and because the U.S. Department of Labor will issue its March employment report on Friday.

If the numbers are soft, more doves will be heard cooing on the Fed.

Wishing you as always, good trading,