Gold Slightly Off To Steady On Reassessment

With no economic news today, the focus of markets was the reevaluation of economic data that astounded last week, namely the overheated new-jobs-creation figure of 295,000.

While many on Wall Street are still worried – frightened really – about the prospect of an imminent rate hike by the Federal Reserve, the weak wage growth in February (0.1% down off of January’s strong 0.5%) is helping to assuage those fears. Additionally, as we sketched out on Friday, the labor force participation rate is at a historical low. If the Fed grapples with those twin plagues and sets forth a course that might mitigate them, we will be more apt to predict a rate hike.

The dollar eased a bit today before it firmed somewhat, helping gold. But predominant sellers are pushing the yellow precious metal to the downside in mid-afternoon trading. Silver and platinum are also off, both around 0.90% while the final component of the complex, palladium is up on a) demand and b) supply shortages due to western sanctions on Russia.

The pause created by reassessing the jobs number is allowing traders to focus on other matters that were pushed to the rear last week.

Greece still matters for Europe, and it would be naïve for any of us to think the debt crisis there is completely solved. What we would all like to see is a thriving zone-wide expansion in Europe. Greece is a headwind and eventually the core economies – especially Germany – are going to have to come to grips with the “weak sisters” like Greece, Spain and Portugal as well as a couple of newer members in eastern Europe.

For those who don’t really follow the cross currents of the interest rate’s effect on gold, in a nutshell, when interest rates tick higher, non-interest generating assets go out of favor. Bonds, solid-yield stocks and even other commodities beyond metals gain favor.

While we don’t like to give an inch on this, we will say that in April, or the latest in June, we are likely to hear and read some language changes in the Federal Open Market Committee’s statements and minutes.

Key FOMC members will undoubtedly be speaking out before the next meeting in late April. Regarding the non-farm payrolls numbers from last week and the Fed, our word to the wise is this: One data point does not a rate hike make.

As a side note, I will be presenting a live webinar next Wednesday (March 11) at 4:30 EST. Please use this link to register for this Free live event

Wishing you as always, good trading,