Market Analysis from CapitalUpdates.com:

Nonfarm Payrolls for July came in higher than the expected 180,000 at 207,000, the largest in 5 months.  Most of the jobs added were in the service sector, with only manufacturing reporting a small decline in payrolls.  Payrolls in previous months were also revised upward by 20,000 to 166,000 in June and 22,000 to 126,000 in May.  The BLS net birth/death adjustment subtracted 76,000 Payrolls.  July is typically one of the few months in the year that the BLS subtracts jobs from the number, though it should also be noted that this adjustment is to the non-seasonalized number, and it only affects the above seasonalized number by a small percentage.

The Unemployment Rate held at 5% as expected and the Average Workweek held at 33.7 as expected, though Hourly Earnings came in higher than the expected 0.2% at 0.4% and added to inflation/firm economic growth fears raised by the higher than expected Nonfarm Payrolls number.  Worries about the fed, higher interest rates, and inflation intensified following this strong report, resulting in lower stocks, lower bonds, a higher dollar, and lower precious metals.

Consumer Credit for June came in higher than the expected $6.0 billion at $14.51 billion, “the biggest increase in eight months, as both credit card use and closed-end lending surged.”  May’s $3 billion decline was revised to just a $1.23 billion decline.

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Oil prices rose on refinery concerns and also on the strong jobs report, as it indicates continuing strong demand.  Oil gained $0.93 to $62.31 on Friday, a new record closing high, and is higher by $1.74 or 2.87% on the week.

Treasuries immediately dropped after the release of the payrolls report as the yield on the 10-year note returned to 3 and ½ month highs.

For the week, the yield is higher by 2.47% and the bond is lower by 0.98%.

The Dow, Nasdaq, and S&P fell off on fears the fed would continue to raise interest rates due to the strong jobs report, with all three indices steadily falling throughout the day and ending near their lows.

For the week, the Dow is lower by 0.78%, the Nasdaq is lower by 0.32%, and the S&P is lower by 0.63%.

Among the big names making news in the market Friday were Wal-Mart, Baidu.com, Pixar, WorldCom, Cardinal Health, Washington Post, Dell, DaimlerChrysler, Delphi, Liberty, Waste Management, and Springer and ProSiebenSat1.

The U.S. dollar index jumped higher on the payrolls report and remained moderately higher for the rest of trade to rebound from 6 week lows.  The euro index fell from 2 month highs. 

For the week, the dollar is lower by 1.48%, the euro is higher by 1.74%, its best week since last November, and the yen is higher by 0.21%.

This week’s economic reports:

There are no major economic reports this next Monday, but there is plenty more to look ahead to in the week ahead.  Among the highlights are the FOMC policy announcement on Tuesday, the Treasury Budget on Wednesday, Retail Sales on Thursday, and the Trade Balance, Import/Export prices, and Michigan Sentiment on Friday.

Gold & Silver Report from GoldSeek.com & SilverSeek.com: 

COT Gold Report - August 5, 2005

COT Silver Report - August 5, 2005

Gold traded mixed and near unchanged in a tight range in Asia, London, and New York, but remained relatively firm in the face of strong jobs data and ended lower by just $0.80 to $436.60.  Silver traded mixed and near unchanged in Asia and London, but fell off in New York following the release of jobs data.  Silver ended near its lows and lost $0.10 to $7.11.

For the week, gold is up $7.10 or 1.65% and silver is down $0.11 or 1.52%.

Gold and silver equities traded just slightly lower in early trade, but then fell off further heading into the afternoon and remained near their lows into the close, experiencing just a slight rebound in the last hour of trade.

For the week, the XAU is up 4.53%, the HUI is up 4.64%, and the GDM is up 5.03%.

More Precious Metals Analysis:

“The gold market attempted to post some positive action early in the session but faded with the rest of the complex into the close because the Dollar managed to hold modest gains on the session. The US economic numbers were strong enough and the ECRI Inflation report was hot enough that gold traders have a little fear of more near term gains in the Dollar. The market didn't toss around the South African gold strike threat for next week and with the equity market down, Treasury prices down and crude oil prices soaring, we suspect that some flight to quality interest was underpinning gold and undermining the silver and platinum markets.” - The Hightower Report, Futures Analysis and Forecasting

Gold & Silver Stock News Update from GoldReview.com:

More news on the South African mining strike set to start on Sunday, McEwen’s involvement with U.S. Gold, Kinross’s update on late financial statements filing, Newmont’s trial in Indonesia, Cambior’s increase in their reserves as Rosebel, Randgold’s completed prefeasibility study on the Tongon project and 10th anniversary celebration, Rio Narcea’s conference call notice, Cambior’s second quarter financial results, Royal Gold’s conference call notice, Canyon Resources’ second quarter financial results, and Silvercorp’s annual general meeting notes were among the big stories in the gold and silver mining industry making headlines Friday.

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- Written by Chris Mullen

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