The immediate response of gold and the other precious metals to today’s NFP data has been predictable,” David Jollie, a precious metals analyst said.
Gold prices spiked today after US non-farm pay rolls failed to meet expected figures, putting a damper on notion the fed is about to embark on a mass scaling back programme on its $85 billion monthly bond buying programme. It was hoped that NFP would meet 180,000 instead they only reached 169,000 leading to the price spike of over $20.
The slowing job rate growth was coupled with a drop in the unemployment rate, as many who are looking for work simply gave up. This news had lead to many speculating that it is too soon to start considering a reining back programme and the economy is not yet strong enough to withstand a reduction in asset purchases.
On September 17th – 18th the Federal Reserve will hold their latest FOMC meeting where it is expected to shed some light on the schedule for beginning to taper back the asset buying programmes. Despite the latest data being worse than expected , the fed may well begin the tapering back in September just not as progressively as first thought.
“The immediate response of gold and the other precious metals to today’s NFP data has been predictable,” David Jollie, a precious metals analyst said.
Precious metals have rallied in the wake of continued loose monetary policies coupled with a potential for further currency debasement and a potential rise in inflation.
This shows just how sensitive gold is to the fed’s stimulus schemes, as the metal rised amid central bank liquidity and a low interest rate environment.
Although gold price has contracted by 17% this year as news of the fed tapering back asset buying measures take hold.
However, by August gold rose again to a high of $1,433.31 amid reports of a military strike on Syria which lead to an influx of safe haven buying, however a delay in the decision as to taking military action against Syria has lead to a slight drop in price.
As we have discussed before September is traditionally a good month for gold making it the ideal time to buy.
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