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    JM Bullion Weekly Market Review (2/5/16)

    Gold is trading modestly lower this morning as stocks sell off, oil declines and the dollar index moves sharply higher. Markets are seeing some volatility this morning following the release of non­farm payrolls data for January.

    According to the U.S. Department of Labor, the country added 151,000 jobs last month while the unemployment rate dipped to 4.9 percent. The headline number was significantly below consensus estimates of 180,000 jobs created.

    Many analysts believe that while the data was lower than forecast, it still exemplifies positive momentum in the U.S. labor market. According to the report, wages increased also adding to some positivity. In addition, weekly hours also saw an uptick indicating some underlying strength in the labor market.

    This report could be especially meaningful given all of the market volatility and turmoil since the beginning of the new year. Payrolls could potentially pick up further if strong corporate earnings are seen.

    This Goldilocks report may give the Fed reason to forebear another interest rate hike in March. If the central bank is going to base any further rate hikes on the data, it seems that further increases in wage growth may need to be seen for some time before further hikes may be justified.

    While worries over China, deflation and sagging commodity prices continue to be a significant source of investor angst, the commodity bear market could potentially be closer to its end. The dollar index has lost significant ground in recent action while the Euro, Canadian Dollar and Aussie have all been on the rise. Commodity exporters and emerging markets have been hit hard in recent months as commodities collapsed, but a turnaround in their currencies could potentially be indicative of a bottom in commodity prices on the horizon.

    Stocks appear to be headed lower in the meantime which may potentially keep a bid in gold and other perceived safe haven assets. Gold has staged a now very clear upside breakout from its previous trading range and could potentially be headed much higher from current levels. In fact, a clean break above the $1160 level (the point of the previous breakdown) could potentially set the stage for a test of $1200.

    The gold market appears to be in “buy the dips” mode at this point and until proven otherwise, the path of least resistance may remain higher.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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