Posted on March 10, 2017
Market Overview: Gold and silver are essentially flat following this morning’s release of the Employment Situation report. Gold is trending lower, and it would appear that perhaps the gold market had not fully priced in a March rate hike by the Fed. Crude oil has also been sliding, not doing the gold market any favors. On top of that, the economic data stream continues to be positive and risk appetite remains elevated. This could potentially keep the yellow metal under some pressure in the absence of any fresh bullish catalyst.
Key Data Points: In the most important economic report of the month, the Employment Situation report for February showed a gain in non-farm payrolls of 235,000. This was well above consensus estimates of 200,000, but also far below some whisper numbers of 300,000. The unemployment rate stood at 4.7 percent, in-line with estimates.
The construction and manufacturing sectors saw outsized gains This strong jobs data will likely “cement” a rate hike from the Fed next week.
Outside Markets: Stocks cheered on the jobs data, and stock index futures are moving sharply higher in pre-open activity. The broad market S&P 500 is within striking distance of the 2400 mark, and the market could potentially pose a challenge to previous all-time highs. Stocks have thus far remained strong in spite of a looming interest rate hike. That could potentially change, however, if rhetoric from the central bank takes on an even more hawkish tone.
The crude oil market could also become a source for concern for stock investors. Crude is currently at a three month low, and has slipped back below the psychologically important $50 per barrel level. Although the lower price of crude does not appear to have had an effect on stocks yet, a further slide could potentially raise alarm bells and fuel some selling in equity markets.
The dollar index is slightly lower today on a corrective pullback.
The Big Picture: For now, gold doesn’t seem to have a lot going for it. Rising rates, higher stocks and economic optimism are all taking a toll on the yellow metal. Gold is now flirting with the $1200 level, and could potentially see a break below. This level may also, however, bring our bargain hunters. The metal has seen a significant slide in the last two weeks and is down around $60 per ounce from its recent high.