Gold and silver are showing a strong bottom in the face of a much better than expected non-farm payroll report, rising stocks, and a rocketing dollar. Precious metals took a big hit on the release of the payroll report, but sprang back in short order to previous levels and above to resume trading in that very tight range we’ve mentioned. The dollar index leapt a half percentage point on the payroll numbers, and continues its strength.
The fact that gold did not break the recent floor after this battering is good news for bulls, as the present floor seems to be strong. Now, attention will focus on whether gold can break that strong resistance level at $1,585. Bargain hunting and physical purchases are helping maintain the bottom, as well as the covering of shorts that expected a big decline.
The payroll numbers aren’t as fantastic as an initial glance may indicate, as many of the jobs added were temporary or part-time jobs, and the decline in the unemployment rate to 7.7% can be partially attributed to people falling out of the workforce after giving up on finding a job. Early feedback from analysts show little of the nervousness that the Fed will curtail quantitative easing, in contrast to last month.
Exchange Traded Products are seeing a split popularity, as gold and platinum ETPs see outflows, but silver and palladium ETPs see gains. Deutch Bank sees increased palladium demand and tight supplies as China begins to address their air pollution crisis in their major cities. Despite the outflow in gold ETPs in the West, Chinese physical demand remains strong. UBs reports continued elevated levels of physical gold purchases through Shanghai.