With much of the attention of the markets trained squarely on stocks and quarterly earnings, gold prices remained essentially unchanged again on Wednesday after being down ever so modestly on Tuesday. This did not come without its momentary intrigue: spot gold dipped several dollars per ounce in a matter of minutes immediately following the release of today's private-sector payrolls numbers for the month of July. However, the market quickly snapped back in early trading, returning to $1,267/oz.
Platinum and palladium each opened higher, while silver prices took a somewhat sharp tumble, losing over 0.6% to trade just north of $16.55 per ounce.
Here are yesterday's closing numbers for the precious metals:
Gold: $1,268.20/oz (-60¢, -0.05%) Silver: $16.68/oz (-12¢, -0.71%) Platinum: $943/oz (+$4, +0.43%) Palladium: $884/oz (+$8, +0.91%)
Crude oil prices sank nearly 3% yesterday while stocks and the dollar closed modestly higher.
Jobs In Focus
The main reason the precious metals (and particularly gold) rebounded so soon after the initial hiccup this morning was that the ADP data was determined to be within the range of normal expectations after being digested a bit. At first, this signal was taken as though the payrolls growth in July vastly exceeded expectations (by, you know, merely meeting them). This is the kind of market environment we live in now! In any event, the private payrolls report is generally viewed as a decent forward indicator of the Department of Labor's monthly nonfarm payrolls, which will be released Friday.
The jobs report from ADP also revised the June total higher, bringing each of the last two months fairly close to the benchmark of 200,000 jobs added per month. The labor market has expanded by about this clip consistently over the course of the past 12 months, excluding the outlier of an abysmal October 2016. Of course, it's noteworthy that the overwhelming majority of the new jobs created during July (98% of them, in fact) were in the service sector.
The U.S. dollar was treading water at 93.0 on the DXY index on Wednesday following the reaction to the jobs data. Wall St was far more interested in the continued trickle of earnings season. Shares of Apple Inc. (AAPL) jumped 6% after-hours to trade at a new all-time high after the corporate titan suggested that iPhone sales, a core part of its revenue stream, remained strong last quarter. This helped lift the Nasdaq 0.3% when trading opened in New York, as each major U.S. stock index is in or near record territory. The Dow Jones also added 0.3% to cross above 22,000 for the first time in history. We continue to see the calmest climb for equities in history, which should be a red flag.
Aside from Friday's NFP report and the Bank of England policy meeting on Thursday, the biggest area of focus for markets is the shift in focus of the U.S. Congress. Legislators are effectively moving on from the healthcare quagmire and now turn their efforts toward tackling tax reform instead. Still, the uncertainty about what that effort even entails should be positive for gold over the second half of this year.
Changes to the tax code would likely have major ramifications on both the American and global markets, fundamentally changing short- and medium-term forecasts for a number of sectors—in yet unforeseen ways. Like the failed healthcare reform measures congressional Republicans were pursuing all summer, any details of the potential overhaul of the federal tax laws are lacking. Nothing more specific than the overall goal of cutting taxes has been explained by either the White House or the Treasury Department thus far, making it a bit more challenging for the American public to examine what its representatives will eventually be voting on.
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.