Market Overview: Both gold and silver are trading slightly lower in early action following the release of the January Employment Situation report. World markets continue to monitor the Trump administration, which at this point may remain the center of attention for some time. Trump has been following through on some of his campaign promises, drawing both praise and harsh criticism. With mounting lawsuits being filed and other global leaders voicing their opinions, the situation regarding immigration and other issues may get even more tense in the coming months. This could potentially keep a floor under gold prices even if stocks remain strong.
Key Data Points: In what is arguably the biggest economic report of the month, the U.S. Department of Labor reported the country added 227,000 jobs last month while the unemployment rate ticked slightly higher to 4.8 percent. This jobs figure was way above consensus estimates of 175,000 jobs, and gave stocks a strong boost.
Although the better than expected jobs data might boost the case for further rate hikes from the Fed, the report did also contain a negative component. Average hourly earnings ticked only .1 percent higher, and hourly earnings for December were revised lower.
The latest reading on the PMI Services Index came in at 55.6.
Markets will still get the latest readings on Factory Orders and ISM Non-Manufacturing.
Outside Markets: Stocks are moving higher this morning as investors cheer on the jobs data. Interest rates are declining as the weaker than expected wage growth in the jobs report likely reduces inflationary fears.
The dollar index is slightly higher, but remains below the 100 level and continues to show signs of having made a near-term top.
The Big Picture: Although the economy continues to move in the right direction, some pieces of economic data remain mixed. Today’s jobs report points to little inflationary pressures but rather slower, sustainable growth. The jobs data is not likely to have a major impact on the Fed’s timing of rate hikes given its somewhat mixed nature.
Gold and silver may see limited downside as investors continue to ponder the Trump administration’s policies and take a wait and see approach regarding Trump’s fiscal spending plans. Gold does appear, however, to have possibly put in a significant bottom and could potentially continue to trend higher on improving technicals and increasing economic and geopolitical uncertainty.
