Market Overview: Both gold and silver are seeing a slight rebound today following heavy losses this week. The precious metals complex has come under significant pressure in recent days as a lack of bullish news and a stronger dollar have taken a toll. Ongoing signs pointing to a December rate hike from the Fed are likely weighing on gold, and the recent slump in the British Pound is helping to boost the greenback. The precious metals have now broken below some key technical areas, and selling pressure may potentially remain elevated in the absence of any fresh bullish inputs.
Key Data Points: The most highly anticipated data point of the week has now come and gone with the release of the Employment Situation Report for September. The report showed the U.S. added 156,000 jobs while the unemployment rate ticked slightly higher to five percent. This figure is below consensus estimates which were looking for 168,000 new jobs added.
This report, while certainly not blowing the doors off, has some significant positives. That being said, the report coming in at the low end of expectations should take the possibility of a November interest rate hike off the table.
There are also several Fed officials speaking in various engagements today.
Outside Markets: Of particular interest this week is the decline seen in the British pound. The realities of Brexit appear to be taking hold at this point, and there seems to be a lot more anxiety about the potential economic impact to the U.K. The drop in the pound may keep a floor under the dollar for the time being, and further dollar strength may act as a significant drag on higher gold or precious metals prices.
Crude oil is trading above the $50 per barrel mark as hopes remain for a cut or freeze in production levels.
The Big Picture: Having broken some key technical levels this week, the precious metals markets are likely to remain on the defensive. The combination of a stronger dollar, a possible December rate hike and a lack of any fresh bullish news are weighing heavily on gold and silver. While stocks have seen some volatility in recent action, the market has not yet fallen apart by any means and investor risk appetite appears to remain fairly robust.
A breakdown in equities could potentially drive a turnaround in gold and precious metals, but thus far no significant weakness in stocks has been seen. That being said, any further negative news about Deutsche Bank could potentially spark stock selling and a flight to safety, and stocks could also start to get jittery as a December rate hike approaches.
