06-Jan (USAGOLD) — Gold is consolidating gains recorded earlier in the week. While there’s still quite a bit of the trading day left, the yellow metal appears poised to notch about a 2% gain for this week.
Today’s jobs release was a mixed bag. The headline nonfarm payrolls number came in at +156k, below expectations of +175k. However, there were net back-month revisions totaling +20k. The unemployment rate edged higher to 4.7%, in line with expectations. Average hourly earnings rose 0.4%, on expectations of +0.3%.
Not great, but not bad either. The market seems to be focusing on the 2.9% annualized wage growth, the highest since 2009. Rising wages further bolsters the re-inflation meme, which in the end should be good for gold.
Bonds came under renewed pressure and stocks rose, buying the dollar in the process. However, gold seems largely increasingly unperturbed by gains in the greenback.
In other data, we saw factory orders plunge by 2.4%, the biggest monthly drop seen in several years. That despite a marked rise in defense related order.
Some of that can be attributed to the three-year rise in the dollar, which resulted in the dollar index reaching 14-year highs earlier this week. That is all being reflected in the ever-widening trade gap. The U.S. trade gap widened to -$45.2 bln in November, outside expectations of -$42.4 bln.
In the weeks ahead attention will be squarely on the inauguration of Donald Trump and his first 100-day policy priorities. Mike put up a great post earlier this morning, suggesting that “Mr. Trump, knowingly or not, is attempting to stand a 20-year economic paradigm on its head.” That paradigm is globilization and the resulting downward pressure on prices.
If inflation expectations begets actual inflation, the Fed is likely to find itself behind the curve as usual. In that event, gold is likely to really shine.
