FEB Gold Report: Job Report’s Impact on Gold Price
Last Friday’s two-and-a-half percent drop of the COMEX gold price capped what has been a difficult week in the precious metals sector.
Despite bullish fundamentals for safe-haven assets, including geopolitical conflicts involving Islamic extremism, Ukraine, and serious concerns regarding the sustainability of a Greek bailout program that threatens to undermine the integrity of European Union mandates, an increasingly strong U.S. dollar index has leveraged the most weight towards investor sentiment. This has led to speculation amongst several key players on Wall Street that the Federal Reserve may raise interest rates as early as June, which in turn has created a virtually unanimous forecast for gold volatility for the immediate future.
Further confirmation of gold market bearishness came in the form of the recently released January jobs report by the Department of Labor, which revealed that employers added 257,000 jobs last month, which according to the International Business Times marked the longest stretch of job gains above the 200,000 level since 1994. Although the figures present a seemingly positive perspective of the labor market, a deeper contextual framework into the data suggests a rather sharp contrast.
Information compiled from ADP, one of the world’s premiere human capital management companies, demonstrates that hiring velocity amongst large companies peaked in May of 2010 and since then, the overall trend within this category has declined.
This is an absolutely critical metric that cannot be ignored since “big business” accounts for the majority of commercial endeavors within the United States and has substantial implications for global economic capacity. It also raises questions regarding the thorny issue of wage growth, which has remained stagnant for several years and may continue to plague the employment landscape if the most successful of U.S. companies are unwilling to fairly compensate their workers.
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