Market Overview: Gold is seeing some decent selling pressure today following the release of the Employment Situation Report for July. Gold had been in a tight trading range this week prior to today, and with today’s selling could potentially see more downside as the near-term technical picture shifts in favor of the bears.
Key Data Points: Today’s release of the Employment Situation report for July is likely to fuel ongoing speculation about the potential timing of the next interest rate hike. According to the U.S. Department of Labor, the country added 255,000 jobs last month while the unemployment rate ticked slightly higher to 4.9 percent. Of particular note was the rise in the participation rate, which moved up to 62.8 percent.
Upward revisions made for both May and June are also another sign of the economy gathering some positive momentum.
All things considered, the economy appears to be on more solid footing, and while some key data points remain lacking, others are continuing to point to higher activity. Investors will likely continue to monitor the data stream closely, and pay attention to any commentary from the Fed regarding rates. Today’s jobs data may potentially help pave the way for a rate hike sooner rather than later.
Outside Markets: Stocks are seeing strong gains in early action as investors appear hungry for risk. Stocks have been in a tight trading range for several sessions now, and today’s jobs data may help drive equities to fresh all-time highs.
Interest rates are seeing a slight uptick today as risk appetite drives selling in treasuries.
Crude oil is under some pressure today after seeing a bounce in recent days. While oil has rebounded quickly back above the $40 per barrel level, it remains vulnerable to further bearish pressure. A break back below $40 could potentially weigh on equities as concerns over energy companies may increase.
The dollar index is sharply higher today following the non-farm payrolls data, as interest rate expectations may be shifting. The dollar has now recouped about half of the recent losses seen, and could be poised for further upside on short covering and fresh buying.
The Big Picture: Today’s jobs data has certainly boosted risk appetite, and gold is seeing some heavy selling today as a result. Investors may also be feeling more confident about another rate hike next month or in December, and the notion of higher rates may be weighing on gold and silver today. While the bigger trend in gold remains higher, near-term price action could potentially provide a good test of the bulls’ resolve and it remains unclear if the current dip will be bought or if today’s selling is the beginning of a larger change in trend.