Jobs Report Crushes Gold and Silver

A huge rebound in the June Job numbers over the dismal report in May immediately crushes the price of Gold and Silver. 287,000 jobs created in June gives the Fed ammunition to bring rate hikes back to the table. This one bit of data is very important to the FED as the chairlady indicated May’s number was just an aberration. This one number doesn’t change the bullish sentiment of the market and in my opinion, as well as some of my Wall street gold trader friends, it has created a buying opportunity to participate in buying the yellow metal at more attractive levels.

I believe the gold and silver market overreacted to this one piece of data. I can’t deny the fact that the number was very impressive, but one piece of data should not have created such a selloff. As I was watching the activity in the futures market right after the number was released, it appeared to me that the nervous longs had stops in place to protect their profits.

This one number doesn’t change the fact the UK and all of the EU community continues to see a strong demand for the physical metal
and as more and more news comes out of the Brexit referendum, more and more individuals will see the need to have gold and silver in a balanced portfolio.

Still we can’t forget that the European Central Bank and the Bank of Japan have ventured into negative interest rate territory this year in hopes of stimulating their economies. Obviously it isn’t working as we see negative interest rates on sovereign bond exposure increase day after day. On a “what does it matter comment,” we see a huge increase in purchases of safes in Japan as more and more people lose faith in the banking system.

What does this all mean? It means that as good as this jobs number was today the FED cannot ignore what is happening around the world and would be hard pressed in my opinion to raise rates anytime soon. I expect after the hard selloff, a recovery in the gold price will be in order.