Gold Choppy Ahead Of Non-Farm Payrolls
Today’s Spotlight Market
Gold futures have been trading in a choppy, sideways manner this week, as traders await the release of non-farm payroll data. Traders are expecting a mixed bag from the report, with the consensus estimating that the US economy will have added 238,000 jobs in February. February is expected to have seen a smaller increase than the January 257,000 figure. Unemployment is forecast to fall to 5.6%, while hourly earnings are expected to show a meager 0.2% increase. Stronger data could be viewed as being negative for Gold, lessening its appeal as a defensive play. Given recent uneasiness by the bull camp, a stronger jobs number could have more of an impact on the metals market than weaker data.
Fundamentals
In addition to the uneasiness of Gold bulls, several strong job numbers could sway the Fed to begin raising rates earlier rather than later. Gold was unaffected by rate cuts by several nations, including China and Australia. Not surprisingly, China revised down its GDP guidance, suggesting more rate cuts may be in the works. There has been a huge slowdown in the property market and China is concerned about deflationary pressure (who would have thought this was a possibility several years ago!). This could result in demand for precious metals as an investment from Chinese households. China could see some normalization in gold demand in 2015. Last year saw a drop off in imports. China imported around 813.13 tons of gold during 2014, compared to 1,158.16 tons imported during 2013, which was a record year.
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