Jobs Report and the Beige Book Pressure Gold

March 7, 2018 - 6:16pm

 by Gary Wagner

The continuation of yesterday’s strong upside move in gold was short-lived with today’s price decline erasing much of Tuesday’s $17 gain.

Gold is trading under strong pressure today in reaction to the robust ADP jobs report and the release of the Federal Reserve’s Beige Book. As of 5:00 PM Eastern standard time, gold futures are currently down -$8.90 at $1326.30.

Gold had been trading higher overseas yesterday following the resignation of Gary Cohn, the head of President Trump’s National Economic Council. The president’s proposal to implement tariffs on steel and aluminum was a key component in his decision to resign.

The U.S. dollar is trading fractionally lower, currently fixed at 89.56 which is a net decline of -0.030 points.

According to Michael Armbruster, managing partner at Altavest, “The dollar ‘should continue to be the primary influencer for gold prices. Gold and dollar daily charts are nearly mirror images if you flip a dollar index chart upside down.’”

Although the U.S. Labor Department’s jobs report will not come out until Friday, today’s release of the ADP report indicated that the job market is robust.

Data released for February indicated that a total of 235,000 jobs were added last month, 35,000 more than the economists’ estimates. This data suggests that there is a strong probability that Friday’s Labor Department jobs report will also come in well above current estimates.

In an interview with USA Today, Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is red hot and threatens to overheat. With government spending increases and tax cuts, growth is set to accelerate.”

Today’s release of the Fed’s Beige Book indicated that the economy continued to grow at a modest to moderate pace in both January and February.

According to Greg Robb of MarketWatch, “The report gives the Fed a lot of good reasons to continue hiking rates when officials meet in two weeks. Fed Chairman Jerome Powell and many of his colleagues have expressed confidence in speeches that inflation will move higher. A rate hike at the March meeting is considered a done deal by the market.”

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action
Tuesday, March 6th we sent out a Trade Alert: Buy April Gold @ Market
Buy at the market. Place stop at 1316
Maintain long gold @ 1335.50. Maintain stop @ 1316
Gold Market Forecast

We did not see any follow through upside today, following yesterday’s $15 plus rise, and the resignation of Gary Cohn. However late breaking news indicated that Trump could implement tariffs on steel and aluminum as early as Thursday. This could boost gold prices. Friday the Labor department releases the jobs report from last month, which could dampen any upside from Thursdays’ announcement.