Gold prices are trading lower today following this morning’s surprising non-farm payrolls data for February. According to the U.S. Department of Labor, the U.S. added 175,000 jobs last month while the unemployment rate ticked up to 6.7%. The country added far more jobs than the consensus estimate of 150,000 and caught many by surprise. A recent string of poor data that has come in below expectations had investors concerned about today’s report. In addition, this report came as a surprise especially in light of the harsh weather that has been experienced by many across the U.S. this winter.
As Janet Yellen has reiterated, the Fed will likely stay the course on its stimulus removal, and today’s report only serves to strengthen that notion. It seems that precious metals investors may see the writing on the wall, and have elected to book some profits after the recent uptrend in gold. Even in spite of some recent weakness in economic data, the U.S. economic engine continues to mend and while not moving forward at the rate many would like, is still showing ongoing signs of improvement. This could be bearish for gold and safe haven instruments but time will tell. For now, stocks continue to make new all time highs, and it is somewhat difficult to see gold making another large run to the upside if equities are still moving higher. On the other side of the coin, the dollar has been working lower and further weakness in the greenback could help keep a floor under gold prices.
Investor angst over the situation in Ukraine appears to have decreased markedly-at least for now. Investors will continue to monitor the situation closely, but for right now it seems that further escalation may possibly be avoided. Markets will be quite vulnerable to headline risk for the time being, however, and things can turn on a dime. The potential for further conflict between the U.S., Europe and Russia may also help keep gold prices from falling too far in the near future.
Gold prices have maintained a solid uptrend since the first of the year, and thus far the trend has maintained intact. The market has been consolidating this week, however, and thus far has not been able to take out overhead resistance in the $1360 area. Gold has a number of things currently working for it and against it, and the tug of war between buyers and sellers may be quite interesting in the coming weeks.
