As noted in yesterday's report, today's unemployment data was going to be a big market mover.
From yesterday’s Gold Seeker Report: "If you review the recent jobs components from recent release such as the PMI and ISM, they were neutral to negative. Initial unemployment over the last weeks has been holding around 340-350k. In my view, the 243k number is rather high and will be hard to manage." - In fact, it was 211k too much.
For a change, the "Net Birth/Death Adjustment" went lower by -91,000 for July. Therefore, adding the above number to 32k gives us 123k - still 120k off the target. Yet, if you look at June’s data, it was revised lower today from 112k to 78k, a 34k revision lower. Therefore, if you are to take out the “Net Birth/Death Adjustment” for June, we are now at a 104,000 job net loss. Simply put, the job market is very weak.
Yet in all of this, the unemployment rate managed to drop to 5.5% from 5.6%. I am sure if you had time to review the calculations, the BLS most likely shrunk the total population number who is in the employment pool – something that needs more investigating before coming to any firm conclusions.
The market is moving, and in a big way. Last report was mentioned: "This is showing real might which is setting itself for a big move here. Now, having a weak jobs data could easily trigger a dollar sell-off, sending gold to above the $395-400 resistance area on track for 405-410."
A dismal report indeed and gold is just around $400 an ounce, challenging resistance but showing strength and ready to bust on through to our next target of 405-410. The U.S. Dollar Index is taking a beating from a very strong bond market, up nearly 2 full basis points sending yields crashing to around 4.20% versus a 4.39% close yesterday and 4.50%+ just a week+ prior. The U.S. Dollar Index is trading just above support at 88.30, -1.34, but below 50 and 200 day moving averages.
After yesterday’s low-volume sell-off in the metal equities due to a weak general market from fresh, record oil prices, high-volume buying is seen across the board. Newmont Mining is currently at 3.3 million shares, about double yesterday’s levels and up a strong $1.75/share or 4.5%. Average 3-month trailing volume is at 4.603 million shares. Note, volumes typically taper off on Friday afternoons during summer trading.
From briefing.com: "..fed fund futures are now pricing in only an 85% chance of a 25 basis point move next Tuesday from 100%. Expectations for September 21 have plummeted to a 12% chance of an additional 25 basis points at that meeting from 75%."
Another key for today to watch for is to get gold close above $399/400 to have this rally get some legs underneath it. The COT report as of last Tuesday will be released at ½ hour before the equities close for the weekend, which should not have a major effect on today’s trading after last week’s massive commercial short-covering moves. All in all, the market looks to close with a strong showing capable of moving back to the top of the range, at minimum.
Have a great Friday,
Peter Spina
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Poor Jobs Data Send Gold & Bonds Surging; U.S. Dollar & Markets Fall
