Gold Shrugs Off Upbeat Data As It Heads Up Once Again

Two reports of note were issued today. The first, and more complicated, is the Fed national Beige Book, which covers the (approximately) six weeks through February 22.

Activity is not exactly booming. But a majority of districts, (analogous to the constituent Federal Reserve Bank’s around the country), show growth. A few regions were flat in overall activity and a small handful showed contraction.

Some of the struggle was wrapped up in a very hard January and February I the northern third of the nation. However, business contacts are optimistic about the near future.

ADP, the company that measures private job growth, reported that private payrolls rose by 214,000 in February. That certainly is upbeat.

Economists surveyed by The Wall Street Journal expected a mild downshift in hiring, projecting an increase of 185,000. January’s gains were revised lower, by 12,000 to 193,000.

The impressive job growth comes in spite of severe weakness in the U.S. energy sector. The weakness in manufacturing growth is also affected by the oil-price depression. If energy and manufacturing were hitting on all cylinders we might be seeing 285, 000 to 325,000 new jobs per month.

Gold found its own strength again, despite the positive news. The news might mean a higher likelihood of the Fed’s raising interest rates, although it’s still a bit too early to begin speculating seriously on that.

Gold is flying more or less under its own power. That said, it should be considered that there is also enough anti-risk sentiment and uncertainty to support the yellow precious metal. Wherever we now pin resistance – in the $1250 to $1260 range – we have to remember that the new, enduring support level is $1200.

Equities in New York seemed to want to push up but crude sent mixed messages and traders seemed to want to reconnoiter after yesterday’s sharp move up. Thus the Dow and S&P 500 remained leashed for the most part, which also kept the tech sector as reflected in NASDAQ, flat.

All three U.S. indexes were up, or down, minimally. In Asia, however, the story was quite different. The Nikkei and Shanghai were up over 4.00% each and Hong Kong was up more than 3.00%.

In somewhat of a counterpoint to gold, U.S. 10-year bond yields rose slightly, meaning that the safety of the bond was not as attractive as gold, at least not without a tiny sweetener. The move (at 3 o’clock in New York) was barely perceptible.

Surveying all that is written above, it seems that gold buyers found a reason to believe while others stayed more or less sidelined.

Perhaps those markets other than gold just aren’t ready for optimism quite yet.

Wishing you as always, good trading,