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A Pre-Fourth Of July Parade Of Factors in Gold, Currencies, Stocks And Oil

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Early today gold slipped into the mid 1150s, a testing ground for lower prices. However, in afternoon trading, gold has come off those lows and is trading in the mid-1160s, off $4 to $5.

A U.S. dollar made weaker by a soft labor report has helped gold modestly, offsetting downward pressure in regular trading. The yellow precious metal has been essentially flat since mid morning in New York.

The dollar slipped not because currency traders don’t like the numbers in the U.S. Department of Labor report but because they are sniffing the air and smelling an interest-rate hike later than sooner. That promises little pressure on real-world interest rates and helps to form the assumption that the dollar will remain stable or go lower in relation to the euro.

Nonfarm payrolls increased by only 223,000 in June the Labor Department said. Adding to the report's squishiness, April and May data was revised downward to show 60,000 fewer jobs were created than previously reported. The unemployment rate fell 0.2% to 5.3%, but labor force participation fell to its weakest since October 1977.

This has some observers speculating that an interest-rate hike could be pushed into the farther horizon of early 2016. For now we are sticking with a call for it in December. We believe that by then ideology within the FOMC will trump pragmatism.

The Greek crisis seems to be on hold until at least Sunday/Monday as the financial world awaits a cock-eyed referendum. Campaigning for support of the Greek administration’s point of view sounds like a mix between a disaster movie and a child’s Saturday morning cartoon show.

Regardless, when the country wakes up, it will still face the same problems whether its citizens like it or not. Not only is Greece in actuality non-creditworthy, with all the bluster and off-the-wall commentary it is acting as if it is not worth lending ten cents to.

U.S. equities markets are either off slightly, up slightly or unchanged in late afternoon trading. At first glance one would think the labor report is impacting it. In reality, the long Independence Day weekend is more to blame. Investors like to keep their exposure down for the 72-hour-plus hiatus in the U.S. while Europe and Asia continue to trade.

Shanghai continues its steep descent, the composite now trading below 4000 for the first time since the end of March. China is now a drag on the rest of the world’s economy. Shanghai is down almost 25% since its closing high was hit in mid June.

Crude oil is down 0.5%, due to dollar weakness and a higher rig count in the U.S. fields, a bad sign for oil bulls. Brent North Sea down marginally on the day.

Another issue we are going to be faced with as we enter the depths of summer is the doldrums. Traders, investors and analysts will be taking their big salaries and spending it on vacations, or on ever-longer long weekends.

The doldrums mean volatility for smaller volume means jumpier moves. These are the months when smaller players can move markets and often do so eccentrically.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer