Gold firmed in overseas trading as Chinese markets reopened after the long Golden Week holiday. Additionally, the North Korean situation seemed to be escalating yet again, providing a bit of a safe-haven bid.
U.S. markets are on a partial holiday, with the Treasury market closed today, but focus remains on the mixed data in recent jobs report. On Friday, the Labor Department reported that nonfarm payrolls dropped 33k in September. It was the first negative print in 7-years, but markets were quick to dismiss it as hurricane distortion and latch on to the uptick in wages and the drop in the unemployment rate.
Nonetheless, St. Louis Fed President Bullard called the negative number “startling.” As noted in my Friday commentary, the NFP data rolled over long before Friday’s negative print and the current hurricane season.
I’m sure the official Fed line will categorize weakness in payrolls as “transitory,” just as they have for inflation. Bullard thinks we need to see more data before committing to another rate hike and I suspect Minneapolis Fed President Kashkari will likely echo that sentiment when he speaks at a regional economic conference tomorrow.
Surprisingly, Fed funds futures as of Friday’s close continue to see a rate hike in December as all-but a sure thing. We’ll see if those expectations have tempered somewhat when that market reopens tomorrow.
For now, gold remains consolidative to corrective. The fact that losses seem to have stalled ahead of the 200-day moving average is encouraging, as is today’s move back above the 100-day MA. A rebound above $1300.00/1308.80 will further ease pressure on the downside and return a measure of confidence to this year’s uptrend.