Thursday, September 1, 2016

What Jobs Tomorrow Means For Gold

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*If the non-farm payrolls number is strong it can mean a rate hike.
*Rate hike cycles are typically not good for gold.
*A rate hike can stall the recent move in gold.

Non-farm payrolls has the greatest weigh on The Fed's next decision to hike rates or not. Fed Funds rates are at all time lows with additional quantitative easing ("QE"). With all of that inflation has been light but the jobs market has reached the Fed's "full employment." For that reason a strong number Friday likely means the Fed needs to raise rates when they decide September 21st. Looking at history a rate hike has proven to pressure gold. (NYSEARCA:GLD)(NYSEARCA:IAU). If jobs numbers are weak it can be good for gold as a rate hike would likely be further pushed off.
Let's look at the reported Non-Farm payrolls
We've had two strong non-farm payroll ("NFP") numbers in a row.
When the Fed decided on their last rate hike in December they saw two large numbers ahead of that meeting (295 and 280 in the chart above).
If Friday's number is big this next FOMC meeting will be facing three large NFP numbers. The Fed would likely raise rates in that scenario.
Let's look at what Fed rate moves typically can mean for gold
Let's look at a chart that compares gold to Fed Funds Rates.




Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS