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>Gold Drops to 9-week Lowsby Peter A. Grant
Nov 02, AM 
Gold came under heavy selling pressure following this morning's better than expected nonfarm payrolls report for October. While +171k is not a particularly good number, it's good relative to recent numbers. Perhaps more importantly, the jobless rate ticked higher, largely because there was a rise in the labor force of 578k. This may mean that some degree of optimism is encouraging those previously detached from the labor market to once again seek employment.The financial press is widely touting the dollar's rebound as the reason for gold's decline today, but as we've discussed in great detail in recent weeks, there's nothing earth shattering about these levels in the dollar index. In fact, the DX is trading just barely above the midpoint of the range that has dominated for the past five years: See my DMR from last week here. See Jonathan's October newsletter submission here. Nonetheless, given the Fed's recent emphasis on job growth, I think today's headline payrolls print was just enough to sap expectations that the central bank will be imminently heaping additional accommodations on top of their already über-easy policy. Certainly, they won't be scaling back on ongoing measures any time soon, they were quite adamant about that in the recent FOMC statements, but there was a pretty strong consensus that the Fed would restart outright Treasury purchases before year-end. Is that off the table because of a +171k payrolls print? That remains to be seen... The market was pretty long in October, as evidenced by commitment of traders (COT) in the futures market. We've seen the number of long positions reduced in recent weeks and today's action may be associated with further position squaring ahead of next week's elections. With the Presidential election pretty much a toss-up, some investors may be moving to the sidelines until the tightly contested race is settled. However, who sits in the Oval Office for the next four years is of little consequence to the underlying fundamentals of the gold market. Tune out all the noise provided by the insesent polls and speculation about who might or might not be at the helm of the Fed moving forward. Focus instead on the realities of supply and demand. Focus on the realities of a sluggish economy and stubbornly high unemployment. Focus on anther debt ceiling debate and the impending fiscal cliff. Focus on the uncertainty provided by the eurozone debt crisis. None of this changes based on the outcome of the election... Peter Grant is USAGOLD's resident economist and a well-known analyst globally in the forex and precious metals markets. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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