Non-farm payrolls in the U.S. for August came in far below expectations this morning, sending stocks down at the open in Wall St., and weakening the dollar.
The euro gained on the dollar’s weakness, helping European stocks trim losses after big gains yesterday.
Gold gained slightly in Asia overnight, and held steady in Europe ahead of the payrolls report. Gold bounced $6 an ounce on the news. Silver dipped overnight, but received a slight pop to bring it to unchanged, thanks to the payrolls report. Platinum once again traded in an extremely tight range, up slightly from yesterday’s close. Palladium was steady overnight.
10am spot prices in New York were:
Gold: $1266, up $5
Silver: $19.09, up 4 cents
Platinum: $1406, up $8
Palladium $877, unchanged.
Yesterday in the Markets
The big news yesterday was the across-the-board interest rate cuts by the European Central Bank, as well as the announcement that QE would begin soon. This caused the euro to tank, which helped drive the dollar up over 1.1% yesterday to close at 83.22 on the DXY index.
Wall St. gained on the ECB QE news, but fell into the red in early afternoon trading. Stocks struggled to regain positive territory before the close, but failed.
The precious metals hit highs of $1,278 for gold, $1,420 for platinum, and $894 for palladium. Closing prices were $1,260.90 for gold, $19.06 for silver, $1,398 for platinum, and $887 for palladium. The fact that gold only lost $6 in the face of such a huge run-up in the dollar showed underlying strength for the metal. Had the dollar stayed even, gold would have been up over $7 an ounce.
Economic News Affecting Gold
The economy only added 142,000 new jobs last month, where experts were expecting 228,000 new jobs. This is the lowest monthly increase in jobs for the year. Job creation for June and July was revised downward by 28,000.
A tiny bright spot was the report that the number of part-time workers who would rather by working full-time shrank slightly to 12% of the workforce. It’s unknown whether these people found full-time work, or lost their jobs.
The unemployment rate dropped to 6.1% from 6.2%, but this was due to the labor participation rate falling to 62.8%, a level not seen since 1978.
The pool of people actively looking for work dipped due to teens dropping out of the workforce, and people exhausting their long-term unemployment benefits. (According to the government, you are no longer unemployed if you stop looking for a job.)
EU composite GDP came in dead-even, and up 0.7% for the year. This was about in line with analysts’ projections.
Geopolitical News Affecting Gold
The “ceasefire that wasn’t” in Ukraine on yesterday, may come to pass today. Russia is apparently pushing the pro-Russian rebels in eastern Ukraine to agree to a ceasefire in order to stop more sanctions against Moscow, but intends to hold onto territory gained towards seizing a land bridge to the territory of Crimea, which Russia annexed this spring.
On the terrorist front, Al Qaeda is apparently upset that no one pays attention to them any more, and has announced that it is supporting Muslim terrorists in India. The new prime minister, Narendra Modi, has a reputation as a Hindu nationalist, and is blamed by many Indian Muslims for not doing enough to stop sectarian violence against Muslims in Gujarat province in 2002, when he was governor. This makes him a polarizing figure to rally Muslim extremists against.
After rumors that ISIS may start supporting Muslim rebels in Chechnya (aka “Russia’s Vietnam”,) reporters are noticing that one of the most senior leaders of ISIS is a Chechen, and many Chechens are fighting with ISIS in Syria and Iraq.
One of the subjects addressed at the NATO summit this week was the number of European and American citizens that have traveled to the Middle East to join ISIS. The terrorist army enjoys showcasing white-skinned jihadis in its propaganda videos occasionally, to drive the point home. Some analysts discount
There is no big economic news slated for Monday, except for Japanese GDP, which will be released Sunday night, New York time. Shanghai markets will be closed Monday for the Mid-Autumn Festival, and Hong Kong markets will close for the holiday on Tuesday. This will remove a good amount of physical demand from the gold market when it opens for the week on Sunday night, New York time (Monday, Beijing time.)