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    JM Bullion Weekly Market Review (1/10/14)

    Gold prices are moving this morning as investors digest the non-farm payrolls data from December. For the month of December, the U.S. added just 74,000 jobs while the unemployment rate ticked down to 6.7% which is the lowest reading since 2008. The jobs number, however, was the lowest amount since the start of 2011 and certainly raises some red flags about the strength of the economy. Median forecasts for the jobs added was 197,000 and clearly this number is far short.

    This data will bring some interesting questions along with it. Is the sharp drop in payrolls weather related? It certainly is possible. Or is the economy just beginning to sputter? Also a possibility. The concern, however, will be that this could be the beginning of a trend in weakening data. This also brings to the forefront once again the whole idea of when and by how much the Fed may or should taper. Tapering appears to have been priced into the gold market-but today’s data may stir the idea that the Fed will likely hold pat for a bit longer than expected before tapering further. This could be a big positive for gold prices. The dollar weakened today due to the data miss, and the idea that the Fed may hold the line for the time being could keep some pressure on the greenback which could work to gold’s benefit.

    There has been a lot of debate recently in the financial media regarding gold’s future with many different ideas. Some feel gold will continue to work lower while others believe that the last two years will prove to be nothing more than a dip in a longer-term uptrend. Of course, we cannot see the future better than anyone else. Gold does seem to have the makings, however, of a market that could reverse sharply due to extreme bearish sentiment.

    Gold has been blasted by many especially now that tapering of QE has begun-but we and many others feel that the reasons for gold ownership are as strong as ever. From a contrarian point of view, gold could put together a surprising rally this year whether the Fed continues to taper or not. Recent price in action in gold seems to suggest that more bulls may be coming out of the woodwork. Since holding the June lows a couple weeks ago, the market has begun trending higher on the daily charts. Physical gold buyers have continued to buy at current levels. If the gold market can break above resistance from the $1260-$1280 area we could see prices go much higher in the coming weeks and months.

    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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