Today was absolutely a risk-off day, with market sentiment favoring the safe haven class of investments as they bid the precious metals higher, and moved equities lower.
With the exception of palladium, the other three precious metals all closed higher on the day with the greatest percentage gain coming from silver, which gained 2.19% in trading today.
Market participants reacted to a jobs report that came in extremely under market forecasts, as well as real concerns of a global economic slowdown with China’s equities markets having the worst single day drawdown since October of last year. It is quite obvious that the current trade war has affected the global economies with China being hit the hardest along with the United States.
Expectations for this month’s US Labor Department jobs report were set at 180,000. When the numbers were released this morning they came in at a meager 20,000 new non-farm payroll jobs being added in February. The discrepancy between market expectations and the actual numbers were huge. Considering that the United States has been adding approximately 160,000 to 200,000 for the last year, 20,000 is the weakest new jobs report in quite some time.
This report, along with lower equity pricing, and concerns over the Chinese economy will certainly influence the Federal Reserve in regards to their current monetary policy. This almost guarantees that it will be months before the Fed raises rates this year. As such it gave the precious metals the boost needed to end the correction that began on February 21st. Gold hit its highest value this year on February 20th when market forces drove the precious yellow metal to $1350 per ounce.
More so the economic concerns stretch beyond the borders of China and the United States. As reported by MarketWatch the European Union has not escaped an economic slowdown stating, “Investors were still reeling from a more dovish-than-expected European Central Bank, which announced new measures to support a slowing economy on Thursday. That included fresh long-term loans to European financial institutions and a surprise pledge to hold off on any interest-rate increases until at least the end of the year. Other data on Friday showed German manufacturing orders fell sharply in January, though December data was raised.”
Our technical studies suggest that gold could trade to $1374 on this current rally. These studies also indicate that there is solid support at $1281 to $1290 per ounce. We also believe that the first level of minor resistance will not occur until $1313, with major resistance at $1350 per ounce.
Wishing you as always, good trading,
Gary S. Wagner - Executive Producer