Traders Await Labor Department’s Jobs Report

June 6, 2019 - 6:11pm

 by Gary Wagner

Unquestionably one of the most important economic reports each month is the U.S. Labor Department’s jobs report (non-farm payroll). Set to be released tomorrow, traders and market participants are awaiting the numbers following a dismal ADP private sector jobs report that was released yesterday. Although economists had forecasted 175,000 private sector jobs created last month, the actual number was only a fraction of the forecast.

It was revealed that only a mere 27,000 new private sector jobs were added in May. The number released from ADP yesterday were the lowest numbers to in nine years. Considering that April’s revised numbers showed gains of 271,000, yesterday’s report shows an abrupt and sizable contraction in new private sector jobs created.

According to CNBC, Wednesday’s numbers may have been overstating economic weakness, just as it has overstated strength in the job market in April. The question now becomes will tomorrow’s report reveal a similar contraction in non-farm payroll additions for May. A weak jobs report tomorrow would suggest the rate cut suggested by Chairman Jerome Powell on Tuesday, and James Bullard, President of the St. Louis Federal Reserve Bank on Monday might be announced at the conclusion of the July FOMC meeting.

The possibility of a rate cut by the Federal Reserve has resulted in both US equities and gold prices running in tandem all week as both asset classes gained value. Typically, there is an inverse relationship between equities which are a risk on asset, and gold which is a safe haven asset. The exception to this rule is points in time when the Federal Reserve revises their monetary policy to be more accommodative. That is exactly what traders and market participants witnesses week with statements from the chairman and other Fed members.

As of 4:10 PM EDT gold futures basis the most active August contract is trading higher, as it has been throughout the entire week. The only difference in today’s move when compared to the daily gains created this week is that for the first time since May 30 gold has not closed with a higher high and a higher low when compared to the prior day. However, yesterday’s exaggerated high, which took gold futures to $1348.90 was an extremely difficult number to trade at or above. Yesterday’s intraday high came within a dollar of the highest price value gold has held this year.

Wishing you, as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action
Today June 6, we raised our stop from $1321.13 to $1328.13
Maintain Long August gold@ $1293.10
Maintain stop @ $1328.13
 
Thursday morning, May 30, we sent out this message -Trade Alert: buy August 2019 gold @ the market. Respectable move today in gold which is currently trading up $6.80 to $7.00, basis the August 2019 contract and fixed at $1293.10.
Gold Market Forecast
We remain bullish for gold on a long-term basis, however, at any moment we could see a short term pause in this rally.  Yesterday gold traded with a higher low and day higher high than on Tuesday,  it was the extended high of $1349 that caught the attention of traders. Today gold traded to a higher low, but not a higher high.
 
Support for gold continues to be  attributed to statements by Federal Reserve Chairman Jerome Powell who alluded to the potential for rate reductions this year to continue the economic expansion. This coupled with Monday's statement by the president of the St. Louis Federal Reserve Bank, James Bullard is significant in that it illustrates real support for rate cuts if needed.  However, at this point the rate cuts have been factored into current pricing.
Sentiment Indicator:
Gold -> Bullish
Silver -> Bullish
S&P 500 -> Bullish
Bitcoin -> Bearish
Bitcoin fundamentals by Joseph M. Wagner II:

The CFE Drops BTC

Bitcoin continues on its slow decent into lower pricing, slightly lower at least for this volatile asset. Volume in the digital currency is roughly equal to the levels during its hay day in late 2017. Several times in April and May total daily contracts bought and sold topped over $20,000,000,000.

In futures the five coin futures contract on the CME is trading down by 1.7% and at approximately 1:30 PM EDT is selling for $7,700 per coin. At the same time single coin futures contracts on the CBOE are being hit harder at $7,665 and down by over 2.3% on the day.

 Trading volume for the only two Bitcoin futures available on the NYSE (for now), are drastically different. The main focus of my research as well as most traders and investors is the CME’s BTC #F, so much so that according to a press release by the CFE (CBOE) "does not currently intend to list additional XBT futures contracts for trading." The remaining futures listed on the exchange will continue to trade, with the last month contract currently for June expiration. This has pushed all investors trading on the CFE have had to switch to CME contracts, this along with institutional interest has made last month, May 2019 has seen the highest open interests at 5,190 up 7% from last week alone.

Ever since Tuesday when BTC #F fell to an intraday low of around $7,400 occurring at noon in New York, the markets have been flat and forming a new base at $7,500. I expect this narrow range and mild moves to continue for the remainder of the week.