On Thursday morning, spot gold was trading about 1% higher at $1,175/oz, a fresh four-week high after a disappointing December. Markets remain focused on hints from the Federal Reserve Open Market Committee (FOMC) and a flurry of economic data coming out as this week ends.
Meanwhile, silver prices also added 15¢ to settle around $16.65/oz. After surging each of the past two trading sessions, the platinum price continued its rally, adding better than 2.5% (+$25) to $970/oz.
When it comes to job creation, this past month's ADP private payrolls report was short of what analysts had expected. The data released on Thursday morning showed that 153,000 new jobs were created in December against consensus expectations of 170,000. The latest number was also well shy of November's total of 215,000. The small business component of December's reading (companies with 50 employees or less) accounted for only 18,000 of the added jobs. The smallest firms (less than 20 employees) even cut back on the number of workers they employ.
Thursday also saw weekly jobless claims announced, with the Labor Department reporting a dramatic drop of 28,000 less claims than the week before. A drop of this magnitude is almost unheard of. This brought jobless claims to an eight-week low—and not far off from its lowest in 43 years. With the headline unemployment rate still at 4.6%, some believe that the U.S. economy is at or near "full employment," although the glacial pace of wage growth would indicate that many of these are part-time jobs. A truly robust labor market would put pressure on wages moving higher.
Everyone will be watching out for tomorrow morning's non-farm payrolls report for more on the employment situation.
Trump and the Fed
Part of the rally in precious metals is being fueled by the dollar taking a breather. Wednesday marked the biggest loss for the USD since the presidential election.
Even though higher interest rates by the Fed are a formula for a stronger U.S. dollar, traders are still hesitant over the "uncertainty" over Trump's policies expressed in yesterday's meeting minutes from the FOMC's December gathering. Depending upon how the economic plan of the incoming Trump administration impacts inflation expectations and general growth, the central bank may be forced to adjust its rate-hike plans.
While Trump's potential nominees for the Supreme Court get all of the attention, the new president will also have the opportunity to essentially remake the Federal Reserve in his own image. Over the four years of his first term, Trump might be able to replace as many as seven Fed members. The dynamic between Trump and Fed could turn out to be one of the most important factors in the early stages of his presidency.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.