Gold Update: July's Jobs Number Not Enough To Move The Fed
San Francisco (Aug 6) Jobs number posts an increase of 255k. I made a tongue- in- cheek remark this morning that a 250k increase (which I did not expect), would still not be enough to move the Fed in September. I stand by that statement. The Fed is looking at everything. The equity market is up on the logic of where else do you park your money. That is not a good reason to invest in anything, and certainly not an illusion the Fed wants to tamper with. Earnings do not support current valuations. Growth is sub-par. Business investment is at all- time lows. Negative rates in Europe, Japan and 10 basis points away in the UK. The risk is to the downside.
We suggested this morning that the metals markets are heavily influenced by news bites and psychology. The big jobs number scared the bulls and the requisite reaction was to sell. And sell they did into a thin market. Is more downside possible, absolutely, but I am watching the $1,338 level, which should provide support. If the equity markets show signs of cracking after the surge following the numbers, I expect metals to regain upside momentum next week. If we lose $1,338, a move to the $1,322 level is possible.