No FED hike – go Gold spike!

Posted on
US Fed Cleveland

Towards the end of last week, the yellow metal went up to 13-moths highs due to the increased expectation of a slow in Fed’s monetary policy pace, which is based on the stagnation of hourly wages last month. The trading range was broad on Friday when the spot lingered in the $1,251.30 and $1,280.60 per ounce area, to settle at $1,270.90 for the day, meaning up $12.70 per ounce or 1.01%. The top of the day’s trend reached the highest level since 2015’s February. Following January’s pace, gold went up 10% in February, the commodity being on the path of marking the stronger quarter in the last three decades. The new support was set at $1,063.20 (4th of January’s low) while the resistance was reset to $1,280.60 (3rd of February, 2015 high).

The US Labor Department released on Friday the latest jobs report. The data was overall positive, but investors focused on a minor 0.1% decrease in the average hourly earnings for the month of February.

In January, the indicator registered a 0.5% growth, but the decline of last month is the first one since the end of 2014. As the US’s economy is in continuous recovery since the Great Recession, the FOMC (Federal Open Market Committee) is especially interested in the wage growth pace. This setback might be the trigger in delaying Fed’s supposed rate hike after the first half of 2016. In December 2015, we should remember that Fed raised the monetary policy interest rate by 25 basis points, from 0.25% to 0.5%.

From the gold’s perspective, any rate hikes coming from the US monetary policy officials will be viewed as bearish. In this perspective, the yellow metal would have to compete with high-yield assets in an environment of rising rates.

The other part of the US Labor Department release consisted in the non-farm payrolls, which went up 242K in the month of February, significantly over the expected 190K and also beating January’s upwardly revised 172K figure.

The sectors which gained the more jobs were: Health-Care, Food Services, Drinking Places and Social Assistance while the Mining sector lost jobs. Since 2015’s December, the US economy produced an average of 225K jobs/month. For which regards the unemployment rate, the figure remained unchanged at 4.9% monthly, after reading its lowest level in 8 years in the month of January. The famous U-6 rate, which regards the number of jobs marginally related to the labor market, went down 2 basis points to 9.7%, compared to 18% at the peak of the economic crisis (in 2010).

(Visited 17 times, 1 visits today)

Technical Strategist, CMT level 2 (MTA). Looking for good opportunities in the market, wherever they are, since 2009.

Follow Me:
Twitter

Disclaimer:

This material is intended for marketing/information purposes only and does not contain, and should not be construed as containing; an attempt of solicitation for any transactions in financial instruments and does not constitute investment advice or research. Past performance is not a guarantee of or prediction of future performance. The Trade Ideas are provided independently by an external third party company, PIA First Limited, which is authorised and regulated by the Financial Conduct Authority FRN 787261 to provide regulated products and services including Investment Advice. Registered in England & Wales, company number 07428345. Registered Office: Kemp House, 152 City Road, London EC1V 2NX. VAT number 153 646014. Copyright © 2018.

ORBEX does not take into account your personal investment objectives or financial situation, Readers should consider the possibility that they may incur losses. ORBEX makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of ORBEX, a third party or otherwise. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of ORBEX. This communication must not be reproduced or further distributed without the prior permission of ORBEX.

This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change.