Gold Mixed After Jobs Report

Posted: Feb 04, 2012 12:01 AM

Gold prices were wild in early trading as the government’s payroll report blew away estimates sending equity futures surging.  The report showed non-farm payroll jobs rising by 243,000 and unemployment dropping to 8.3 percent, the lowest it’s been since January of 2009. 

The jobs report also showed the people going back to work were making more money.  The report blew out earlier estimates of 145,000 jobs added for January and showed an acceleration in jobs growth over last year. 

Gold is currently down $8.87 to $1,747.93 and silver is down $0.18 to $34.05, but trading is too chaotic right now to call a direction on the day. 

Commodities are all over the board as markets digest the better than expected employment news.  Crude oil, gasoline, and copper surged, while gold and silver dipped.

I wouldn’t read too much into gold and silver prices today as the news will take a bit of time to filter down to the commodity markets.   Markets will likely settle down when people remember that we are still facing a huge jobs deficit, both in this country and around the globe.  In the U.S. we would have to add 250,000 jobs a month for several years to get employment back to 2007 levels. 

The jobs report takes center stage in economic news now that Greece seems to have stabilized for the moment.  But we’ve all been to this rodeo before and if history is any guide, the debt situation in Athens will be back in the news very soon. 

Expect the surging equity markets to be a headwind for gold, but that doesn’t mean it’s a sell signal.  There’s still enough uncertainty in the global economic situation to justify investor caution and big investments like housing and equity markets are not any better deal today than they were yesterday.

Still, it’s good news and it’s Friday; never a bad combination.  Perhaps the thing to do is just allow ourselves to feel good, maybe leave a little early today, dust off the golf clubs and have a great weekend.

Chris Poindexter, Senior Writer, National Gold Group, Inc