Posted on April 07, 2017
Market Overview: The gold and silver markets are both seeing some solid buying interest this in early action today. The safe haven bid is on as investors digest the military action taken last night by the U.S. against Syria. Gold has hit five month highs on the news, and could potentially see even further upside based on increasing risk aversion and an improving technical posture. Stocks initially saw some selling on the news, but have since largely recouped their losses and appear relatively calm at this point.
Key Data Points: The latest Employment Situation Report was a dud to say the least. The U.S. Department of Labor and Statistics reported that the country added just 98,000 jobs last month. This reading was well below the consensus estimates of 175,000 jobs added, and is the lowest reading since last May. Some analysts are suggesting the significant dip could be attributed to weather, and investors will now be very eager to see if there is a solid rebound when April’s jobs data is released next month.
There will also be a couple Fed officials speaking today at various engagements.
Outside Markets: Although today looked like it had the makings of a very volatile session, markets have calmed down considerably and right now investors appear to be simply pondering what may be next in terms of military action. Stocks are now trading near the unchanged mark, although bonds and notes remain sharply higher.
The dollar index reversed course form being slightly lower earlier today and is now up slightly on the session. It appears that for now, gold is the preferred safe haven instrument being bought up by nervous investors.
The Big Picture: Last night’s missile strikes are the first major action taken by the Trump administration and represent a significant change of opinion. Trump has before discussed avoiding conflict with Syria, but it seems that the most recent atrocious chemical attacks on innocent civilians crossed the line in the President’s mind.
How the action may strain relations with Russia remains unclear. It could potentially have a significant impact, however, and could further exacerbate the ongoing speculation of Russian interference in the U.S. Presidential election.
The conflict with Syria, combined with a lousy jobs report and ongoing uncertainty about the Trump administration could potentially keep a floor under perceived safe haven assets like the metals. For now, the path of least resistance in the metals complex appears to be higher.