Jobs Numbers Cause Gold Jump
After the last week’s lackluster jobs numbers were reported, gold futures got a big jump, halting a weekly decline. After the Bureau of Labor reported only 151,000 jobs were added last month, investors sought a safe haven in the yellow metal while hopes of a September rate hike were all but squelched.
The gold spike halted a weekly loss fueled by two weeks of so-called “hawkish talk” from Janet Yellen and other monetary policy makers.
According to Bloomberg, gold futures for December delivery gained 0.4 percent to $1,322.40 an ounce at 12:02 p.m. on the Comex in New York, reducing a weekly loss of 0.2 percent.
Senior market strategist at RJO Futures in Chicago, Phil Streible stated, “Traders are bidding up gold because they think the jobs number isn’t strong enough to justify two rate hikes this year.”
From the Jackson Hole Symposium to the jobs number report, the last two weeks have been a textbook example of how the Fed uses uncertainty and possibility to test the waters of the market. Each time they send down proclamations, investors inevitably react by running to assets and bonds, while moving away from commodities like gold.
Given the effect of their failed policies, it’s surprising the Fed has the credibility to pull this off. Every time the policy makers seem optimistic because of job growth and inflation numbers, the reality of the continuing recession, via facts like low employment, rears its ugly head.
Peter Schiff believes the Fed’s intentions for suggesting rate hikes is more complicated than it appears:
The Fed wants to maintain the possibility of a rate hike so they can take away that possibility as their first real easing. That’s like a rate cut. So if they change their forward guidance from ‘a rate hike is possible’ to ‘a rate hike is probably not going to happen,’ then they can say a rate cut is possible to actually cutting rates. Since they have so little wiggle room to actually cut rates, they want to have a lot of room to alter their forward guidance.”
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