It’s Friday, and up until this morning’s jobs report (more on that later), the week just kept getting better and better in the precious metals market. Yesterday saw news reports both at home and abroad predicting the continued strength of gold as an investment.
Let’s start overseas as we continue to see sustained fallout from England’s Brexit decision back in June. It’s a pretty gloomy financial outlook for Britain, as the Bank of England just slashed its main interest rate down to 0.25%–a record low. In response, the Bank has begun quantitative easing procedures of its own by expanding government bond purchases. So far, the Sterling has dropped another 1.5% in value, but spot gold shot up 0.5%.
Outlooks such as this one continue to prop up gold on the global stage. As of this writing, fully one quarter of all global bonds are offering negative yields. Many experts are openly predicting a steady march of $1,500 per ounce over the next six months. And with gold up 29% YTD, it sure seems possible that this ride will continue.
Lastly, geopolitical events around the world are still causing enough regular concern to continue lifting gold to new heights. What we’re seeing is this–the demand in the global currency markets has so far allowed gold to witness the biggest rally in U.S. dollar terms since 2008. That’s big.
BUT now for the big news on America’s shores this morning. U.S. job numbers are in and they are big. The Labor folks report 255,000 new jobs for July, a much stronger rate from just two months ago. To put into perspective how big a surprise this is to the experts, economists in a Reuter’s poll had predicted an increase of just 188,000 for July. And this is the second straight month of job growth. All eyes and ears will be on Janet Yellen later this month when she addresses the Jackson Hole monetary policy symposium as this sustained growth is once again inspiring talk of an interest rate hike later this year.
The precious metals market responded to news by stepping off their strong numbers. Here’s a look at the stats:
Author Name: Walter Pehowich
Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.