Gold prices are steady this morning after today's non-farm payrolls report came in slightly under expectations. Anxiety over next Tuesday's presidential elections and rising uncertainty over the path Britain will take in exiting the European Union are holding more sway over the markets.
Spot gold prices gained $5.70 yesterday to close at $1,302.20, while December gold fell $4.90 to settle at $1,303.30. Silver isn't sharing in gold's safe haven demand. Spot silver fell 13 cents yesterday to $18.22 an ounce. December silver futures fell 27.7 cents, or 1.5%, to settle at $18.41.
This morning, the Labor Department's non-farm payrolls report said that 161,000 new jobs were created in the US economy in October. This compares to economists' expectations of 173,000 jobs. There were heavy upward revisions in the jobs numbers from the previous two months, which make October's gains seem a little weak. Job creation in August was revised upward from 167,000 to 176,000, while September's job numbers were increased from 156,000 to a whopping 191,000. The unemployment rate fell from 5.0% to 4.9%, but that was nearly all from discouraged people dropping out of the job hunt.
One unequivocal bright spot in the report was news that average hourly earnings rose 0.4% last month from September. Year-over-year, wages have increased 2.8%. This is another check in the "raise rates" column for Janet Yellen and the Federal Reserve.
Speaking of rate hikes and the Federal Reserve, the bond markets are pricing in a near-certainty that the Fed will raise benchmark interest rates at their December 14th meeting. Yields on longer-duration bonds are increasing on the secondary market to reflect the expectations of higher rates in the future.
The dollar is steady this morning against most major currencies. The DXY dollar index is holding steady after yesterday's losses. The British pound had a hefty rally of over 1% yesterday, as the Bank of England wouldn't rule out an interest rate hike in the near future. The ruling of a British appeals court against the May government's handling of "Brexit" also contributed to the pound's gains. The court ruled that Parliament must have the final vote on any invocation of Article 50 of the Lisbon Treaty, which says “Any member state may decide to withdraw from the Union in accordance with its own constitutional requirements.” [emphasis added] Since Parliament is required to approve any treaty, the court's reasoning goes, it must approve the abrogation of any treaties in force.
Oil prices continue to suffer from a shockingly high build in US crude stockpiles. The Energy Information Administration reported that oil in storage increased by 14.4 million barrels last week. This is the largest one-week jump in crude inventory since the EIA began keeping records in 1982. West Texas Intermediate contracts are trading under $44 a barrel this morning.
On Wall St, the S&P 500 is attempting to break a discouraging eight-day losing streak. Volatility in stocks keep rising as presidential opinion polls show Donald Trump closing the gap between himself and Hillary Clinton. That "fear gauge," known as $VIX, has never climbed nine days in a row, so traders are watching it closely as the last week before the election winds down.
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