From the Trading Desk
On Friday, US nonfarm payrolls came in at 242,000 for the month of February, widely beating economists’ expectations of 190,000 jobs. The unemployment rate was steady at 4.90% while revised figures showed that 30,000 more jobs were added in December and January than previously reported. The positive labor data should have been negative for gold as a stronger labor market gives the Fed increased legitimacy to raise rates further. Gold initially slumped after the release of the labor figures but closed the day at thirteen month highs. The fact that gold shrugged off the data and closed so strongly on a Friday is a good sign in the short to medium term. Gold is breaking away from traditional correlations and is trading on its own accord which is positive for the market. This week has seen consolidation so far with resistance coming in at the double top of $1,280 and support quite a ways lower at $1,235. Silver failed two days in a row at $15.80 and has turned lower after four up days. Support is at the 200 day moving average of $14.92.
Gold moved up once again overnight to 1279 and then decided it needed a timeout form the run it has been on . I do notice this timeout came once U.S. markets opened and DUST took off like superman hitting a high of 3.98 before pulling back a little but last minute of trading broke to close at 3.99, a rather bullish view for it. We might get a further sell off in gold and then it will decide if it wants to test the highs one last time to $1,300 or just say I’ve had it like Goldman Sachs warned about again today.
In an article with the title Beware ‘premature surge’ in commodities, Goldman Sachs commodity analysts Jeffrey Currie said their near-term target for gold was $1100/oz. What I think really happened here is Goldman Sachs also came out with a call that gold was topping about 3 weeks ago and maybe wanted sellers to come in so they could go long gold and ride the wave higher, which they did. And here we are about 3 weeks later and this time my guess is they were net sellers because all commodities got hit today.
I would look for continued selling into tomorrow, then we’ll reassess the micro viewpoint. I want to see if China/Europe now sell off in precious metals. God knows the Chinese are not in the expanding mode.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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