Gold prices are solidly higher for a second day, as uncertainty builds in the marketplace. The ADP private sector payrolls report came in far below expectations this morning, giving gold prices the impetus to break the very important $1,300-an-ounce level for one shining moment.
ADP reported that 147,000 new jobs were added to the US economy in October, the lowest growth in five months. Economists surveyed by Bloomberg expected a 165,000 read. However, the September private sector jobs report saw a huge revision upward, from 154,000 to 202,000.
Spot gold continued its rally, trading as much as $15 an ounce higher in early US trading to build on a gain of $13.00 an ounce for the first two days of the week. Spot silver is also seeing healthy gains, keeping alive a rally that saw the white metal gain 2.63% on Tuesday.
The private sector payrolls miss isn’t the only thing moving the markets this week. Recent polls show the gap shrinking in the presidential race, increasing the “Trumpetition” facing Hillary Clinton in her fight for the White House. The odds of a Donald Trump presidency have more than doubled in the last week, from 13.8% to 30.4%. Trump’s odds were the highest on July 30 at 50.1%, and hit a nadir of 10.8% on August 14.
If there’s one thing stock markets hate, it’s uncertainty, and Wall St has been getting that in spades. The S&P 500 volatility index has risen 50% in the last month, and has gained every day for the last six days. Also known as the “fear gauge,” it is at its highest level since shortly after the Brexit vote on June 23.
The new Clinton email scandal and resultant surge in Trump’s poll numbers Wall St lower for the seventh session in a row this morning. The S&P 500 fell Tuesday to its lowest point since July 7, pushing its year-to-date gains to only 3.3%. As a comparison, gold futures are showing a 21.94% gain YTD, while silver is 32.72% higher.
The dollar is weaker for a second day today, after having its worst day in six weeks, due to tightening presidential poll numbers. This morning’s miss on the payrolls report raises the possibility that the Fed will not raise interest rates again for a long time after the expected hike next month. The odds of a December rate hike are still standing around 73%, according to CME Group’s FedWatch tool. Amid safe haven demand, the 10-year US Treasury yield has also fallen for three consecutive trading sessions, standing at 1.80%.
Joining the downward slide of other markets, oil futures are getting crushed this morning. The US Energy Information Administration today reported that US crude stockpiles rose an unbelievable 14.4 million barrels last week. Over the past two weeks, crude oil prices have shed 10%.
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