Gold Remains Solidly Above $1,200 Following Today’s Job Report

October 5, 2018 - 6:41pm

 by Gary Wagner

Interesting activity is afoot in the financial markets as a reaction to the release of the Labor Department’s jobs report numbers for September. According to the Labor Department, there were 134,000 jobs added in September. This was well below economic estimates which were looking for 185,000 jobs to be added last month. The Labor Department also upwardly revised jobs created in July and August.

These upward revisions coupled with the fact that the unemployment rate is at a 40-year low were supportive of precious metals pricing, with the exception of platinum, and put continued selling pressure in U.S. equities.

Although the jobs report’s numbers came in below expectations, many economists cite hurricane Florence as a primary force resulting in September’s lower numbers.

As reported by MarketWatch, Thomas Simons, senior money market economist of Jeffries LLC, said, “September payrolls came in substantially weaker than expected, but it was certainly due to the effects of Hurricane Florence. We have seen this time and time again after big hurricanes (last September being a very good example after Hurricane Harvey, when payrolls fell 33K in the initial print). So, ignore the weakness in payrolls.” 

Most impressive was the fact that the last time the unemployment rate was at 3.7% was in December 1969, almost 50 years ago.

Although these numbers are supportive of the proposed interest rate hike by the Federal Reserve in December, there was no adverse effect in precious metals pricing. In fact, the only precious metal not to score moderate gains today was platinum.

As of 4:45 PM Eastern standard time, gold futures are currently up $5.40 and fixed at $1,207 per ounce. Silver gained nine cents on the day, with the most active Comex contract presently fixed at $14.68, and palladium up an impressive 1.67% ($17.5) and fixed at $1,063 per ounce. In fact, the only precious metal that did not exhibit gains on the day was platinum. Platinum futures are currently trading off by $0.10 and fixed at $824.40.

Palladium Moves Closer to Parity with Gold

Because of the increased demand for palladium, as well as the limited geographic regions in the world which contain the precious metal, palladium has been a runaway freight train, gaining almost 30% in just a month and a half. Recent activity in gold and palladium have moved their prices closer, with a difference of only 144 dollars.

A major precious metal refining company, Johnson Matthey, reported that palladium demand exceeded supply by 801,000 ounces in 2017. They are also predicting a shortfall this year of 239,000 ounces. These numbers highly support a continued price increase in palladium.

If palladium prices reach parity with gold, it would be the first instance of this occurring in 16 years.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action
We are flat with no active trades in gold or silver. We will talk about a trade we plan to trigger next week on today's show.
Gold Market Forecast
Tuesday’s price advance in gold was significant in that it traded above $1200 per ounce, a key and critical support level. Although today’s moderate decline took pricing off of the two-week high, and gold remains above $1200, it seems as though the basic fundamentals which have driven gold prices lower are back, and putting pressure on gold prices.
 
The key will be whether or not gold can trade and hold above $1200. If we continue to see strong economic data, a runaway bull market in US equities, and higher interest rates, we should expect to see more pressure taking gold prices lower. Then there is Jobs report due out on Friday. The Labor department numbers came out today below forecast and was supportive of gold.