Market Overview: After being down earlier in today’s session, the gold market once again saw buyers entering the market even as stocks saw significant upside and risk aversion appeared to be on the decline. Gold remains within earshot of recent highs that could potentially see the market begin a fresh and significant leg higher in price. The gold market appears to be showing a lot of resilience lately even in the face of positive economic data as long-term bullishness remains on the upswing.
Key Data Points: The economic data highlight of the day was this morning’s release of the Employment Situation report for June. According to the report, the U.S. added 287,000 jobs last month while the unemployment rate rose slightly to 4.9 percent. Consensus estimates were looking for an additional 180,000 jobs with the unemployment rate steady at 4.7-4.8 percent. Many investors are likely now asking if the May jobs report was simply an anomaly. The better than expected jobs data was well-received by investors, and drove buying in equities.
Even with today’s strong report, job growth appears to be slowing from first quarter levels. This, along with the recent Brexit vote and other factors, may keep the Fed on hold regarding interest rates for some time to come yet.
Outside Markets: Stocks are roaring higher today, and an attempt at a new leg higher for equities appears to be in store. The broad market S&P 500 was up over 30 points at 2122 and more follow through could be seen to begin next week.
Crude oil prices did not show much reaction to the jobs data and remained around unchanged levels late in the trading day.
Interestingly, interest rates saw slight declines as there still appears to be some degree of risk aversion in the marketplace. At some point, however, either stocks will fall or rates may begin to rise.
The dollar index saw some buying after the jobs data that faded throughout the session. Late in the day, the greenback is slightly lower.
The Big Picture: Gold showed some impressive strength today bouncing back from weakness seen following the non-farm payrolls data. The yellow metal’s ability to bounce back in this fashion could be indicative of significant underlying strength, and even though prices didn’t rise by much, today has to be considered a victory by the bulls. Ongoing uncertainty surrounding the potential implications of Brexit as well as the notion of lower interest rates for longer may keep gold well-supported, and the market could potentially see further upside in the coming weeks and months. That being said, at some point the divergence between stocks and rates is likely to come to a head, and if stocks begin to falter, the buying in gold could potentially accelerate.
