Payrolls Disappoint and Boost Gold

Published by Filipe R. Costa on Mon, 10/09/2012 - 13:11
gold

Daily Market Commentary for September 10: As desired by many, the last payrolls report disappointed. It seems odd, but many were anxiously waiting for a payrolls report that would help the FED in justifying another round of quantitative easing. The number came in at 96,000, below the expected 125,000.

Equity markets didn’t react much to the report as, by one side the numbers are not encouraging in terms of the state of the US economy, but by other side at least they can be the trigger for QE3. We will have the answer next Thursday when the FOMC meeting will occur. If it fails to deliver, markets may react and enter in sell off mode.

Contrasting with the payrolls number, the unemployment rate decreased to 8.1%. That may give a boost to Obama but it is not exactly the best sign about the economy as the decrease is more the result of people abandoning the work force rather than getting a job.

Gold was boosted higher more than $35 as it is working as a gauge for QE3. The worse than expected number raised the probability of QE3 happening and thus boost gold prices.

For now there isn’t much enthusiasm as investors are carefully preparing for the Federal reserve meeting next Thursday. At the time of writing, the FTSE 100 is trading around 5,800, just 5 points above Friday’s close.

Name Last price Close Price % 5-Day % YTD %
CAC 40 07/09/2012 3519.05 0.26 3.11 11.37
Crude oil (Light Sweet) Composite 07/09/2012 9633 1.61 -0.27 -2.7
DAX (Xetra) 07/09/2012 7214.5 0.66 3.5 22.31
Dow Jones Industrial Average 07/09/2012 13306.64 0.11 2.35 8.91
EUR/GBP - £ per Euro 07/09/2012 0.8005 0.97 0.96 -3.92
EUR/USD - US$ per Euro 07/09/2012 1.2816 1.46 1.88 -1.07
FTSE 100 07/09/2012 5794.8 0.3 1.46 3.99
FTSE MIB 07/09/2012 16110.25 2.09 6.69 6.76
GBP/USD - US $ per £ 07/09/2012 1.6009 0.48 0.91 3.08
Gold (LBM) $ 07/09/2012 173460 1.79 3.54 10.7
IBEX 35 07/09/2012 7882.8 0.26 6.23 -7.98
Nasdaq 100 Index 07/09/2012 2825.11 -0.16 2.59 24.03
Nikkei 225 10/09/2012 8869.25 -0.03 0.97 4.9
S&P 500 07/09/2012 1437.92 0.4 2.75 14.34