Market Overview: Both gold and silver are seeing strong gains following the release of the the Employment Situation report for August. Markets may be breathing a sigh of relief as the non-farm payrolls data would seem to suggest that the Fed is not likely to hike at its meeting this month. There may also be some short covering taking place as well as position squaring ahead of the long Labor Day Holiday weekend.
Key Data Points: In undoubtedly the biggest economic news release of the week, the Employment Situation report for August showed the U.S. added 151,000 jobs last month while the unemployment rate held steady at 4.9 percent. The 151,000 jobs added was below consensus estimates looking for 175,000 jobs added.
The labor data seems to be solid but far from overheating. Today’s report could very well keep the Fed on hold this month regarding interest rates. The central bank will likely want to see if hiring bounces back in September before raising rates again.
The latest reading on Factory Orders will also be released later this morning, with consensus estimates looking for a two percent rise for the month of July.
Outside Markets: Markets are seeing some movement in the aftermath of the non-farm payrolls data. Stocks are moving moderately higher, as is crude oil and many other commodities. The dollar is seeing some light selling following the report, but thus far nothing significant.
While investors may be cheering on the notion of rates staying put for now, the party may not last too long. The Fed may sit tight until next month, giving it the chance to look over further data. Of particular importance may be the jobs data for September, where the central bank may look for a stronger hiring number than what was seen today.
Interest rates are rising, however, following the report. The selling in treasuries may, however, be a function of profit taking and position squaring ahead of the long weekend.
The Big Picture: Gold could see some renewed buying interest as interest rate expectations may be shifting, although it seems that rate expectations are not likely to move much. While interest rate sensitive instruments such as gold may be getting a short reprieve from higher rates, investors will likely just turn their attention to December now for the next possible rate hike. This could potentially keep a lid on gold prices for the time being, unless some significant weakness in the data stream is seen in the coming weeks.
