Gold takes abrupt but not unexpected turn to the downside in wake of strong payrolls number

(USAGOLD – 12/6/2019) – Gold took an abrupt but not wholly unexpected turn to the downside in the wake of this morning’s job report which showed strong gains in U.S. payrolls for November.  The metal is down $13 at $1463.  Silver is down 20¢ at $16.77. Gold analysts had warned earlier in the week that a strong payrolls number could lead to price weakness. At the same time, some are likely to see the latest surge in stock values – the DJIA is up 180 as this report is posted – as an opportunity to trim positions. Likewise, some will see gold’s weakness as an opportunity to buy. It will be interesting to see if the early reaction sticks as the day wears on and we move into next week. Today’s strength can quickly turn to tomorrow’s weakness and vice versa.

“The major stock market indices will move sideways through the remainder of the month (and year) to end the year about where they are now,” says James Ricards in a fascinating piece on programmed trading (Time to reduce exposure to the stock market) posted at Daily Reckoning. “That said,” he continues, “if markets move outside a narrow range, there is more downside potential than upside. This is a good time to lighten up on equity exposure and reallocate to bonds, cash and gold.” In explaining the role of computerized trading in the chronic see-saw market action in stocks, bonds and gold, Ricards asks, “How is a robot supposed to understand a highly conflicted human? It can’t. But, it can issue automated buy and sell orders on every new headline.”

Chart of the Day

Chart of Big Money sentiment surpassing lowest ever reading in 2002

Chart note:  “For the first time in 20 years,” says SentimenTrader’s Jason Goepfert, “the big money is betting against stocks. The latest semi-annual survey of big money managers by Barron’s showed a Bull Ratio below 50% for the first time ever, far surpassing the previous all-time pessimistic reading in October 2002.”

 

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