Gold prices are pushing moderately higher this morning and are attempting to retake the psychologically important $1300 level. This morning, the U.S. Department of Labor released its non-farm payrolls report for March. The U.S. added 192,000 jobs while the unemployment rate held steady at 6.7%. The number of jobs added was a bit on the soft side as consensus estimates were looking for an increase of 206,000 jobs. In addition, consensus estimates were looking for a slight dip in the unemployment rate to 6.6%.
Data for February was revised slightly higher. Following the ADP report earlier in the week, which was also a tad soft, many still thought we might see a great number today well above the 200,000 mark. Although the data was not a huge miss, it was a bit off. Stocks still opened higher out of the gate, while gold and silver opened higher as well. As of this post, stocks are losing a little bit of momentum while gold is holding strong-there is a lot of day to go, however.
It seems reasonable to assume that gold and precious metals are moving higher because of short-covering but also because of the slight miss in the jobs data. This slight miss may add some credibility to the idea that the Fed may hold off on removing more stimulus. The dollar index is trading flat currently and appears to be trying to make up its mind. Crude oil is also moving higher again today, and has reclaimed the $100 per barrel mark. Economic optimism is helping drive crude oil higher, and higher oil prices could help lend support to gold and precious metals.
For now, it is looking possible that gold has reached a near term low in the $1280 area. The next few sessions will be very telling as the bulls attempt to shake out more shorts and hold gold prices above the $1300 level. Gold traded in a fairly modest range this week while awaiting the jobs data, and it is quite possible that the market tips its hand now that the cat is out of the bag.
It would seem, however, that gold’s upside potential may still be limited by higher stocks. As the markets continue to make new all time highs, money continues to flow into equities as investors chase the market. It may be difficult for gold to gain a great deal of traction until investors are once again looking to reallocate capital. $1320 could be a potential near term upside target, while this week’s lows around $1280 may act as support.
