We got more of a shake up than gold bugs bargained for with the good unemployment report today. Gold fell quickly and before you knew it 2 hours later it was down over $30. Silver suffered the same type of decline.
Gold still recovered slowly the rest of the afternoon, gaining close to $10 off the lows.
Silver managed to close above $16 to close at $16.10, but from the high to the low for the day fell over $1.00 going as low as $15.71.
So yes, news does move the precious metals market, and it seems the biggest news to move the metals is the unemployment report. The Fed seems to put the most emphasis on this report and in fact these numbers are part of their dual mandate, steady employment and price level. The folks at CNBC worship these numbers on unemployment, but guess what? Today didn’t work out so well for them did it? The stock market plunged 195 points and all they can do is blame the weather for lousy GDP numbers.
When I wrote my article Data is Dead; All Hail the Fed! I tried to point out that it didn’t matter what the data told us, all eyes were on the Fed and the fact that everyone knew they were about to raise interest rates. On Wednesday, the Fed disappointed all the cheerleaders because they read the same data as I do. They also saw the effect of the data through the lousy 0.2% GDP growth for the first quarter. Why was this such a surprise for anyone?
I was pointing out time after time that the Fed loves to “talk the talk” but when push comes to shove, they can not raise interest rates because the economy is not ready for it yet. We learned this to be the case finally this week. But will today’s unemployment report which was better than expected change things? It seemed the market still traded Fed news, and not the good unemployment report news. But gold did trade the good unemployment news. Funny how that works.
There is more volatility entering the picture now and I would think that might be good for gold still. Yes, I still lean long for the short term. Dollar is down under 95 on the index now. Perhaps next week we finally get past that 2011 mark for a little run.
I don’t want to play both sides of the call here as you know where I lean. The Nov. 5th low in gold of $1,158 is the only number I care about on the downside. I don’t see that being broken with a dollar that is currently falling. One of my other bullish indicators is the phone ringing and today it rang a lot more. No one else can give you this insight. We’ll see what next week brings.
Manufacturing PMI tomorrow so it should be an easier day to trade and the same goes for next week.
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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