The Latest Positive Employment Numbers Could Not Weigh Down Gold
What Will Weigh Down Gold? (Hint:Not Employment Data or Dollar)
Employment numbers
The economic data that came out on Wednesday, March 2, 2016, regarding non-farm employment remained positive. The figure estimates that the number of employed people during the previous month, excluding the farming industry and the US government, was 185,000, while the actual outcome came in at 214,000. This likely helped the US dollar as it saw an uptick against the basket of the leading world currencies.
But even the rising dollar and the positive data on the economic front could not weigh down gold. Fear that the Federal Reserve might raise interest rates in March seems to be long gone.
Global turbulence
Amid the ongoing crisis in China and the shocks that it sent to equity markets worldwide, gold has buoyed on safe-haven demands. Now that China is turning to negative interest rates along with Japan and Europe, the chance that the US can further hike its interest rates look dim, thus further supporting gold. To be sure, the most crucial factor affecting gold under the current scenario is the nationwide monetary policy. Higher interest rates often curb the appeal of non-interest-bearing assets such as gold and silver, so lowered rates are actually helping these precious metals.
But although gold and silver saw an up-day on Wednesday, platinum and palladium remained subdued, dropping marginally. Miners and mining-based ETFs often follow the price changes in gold and silver, rather than those in platinum and palladium. The mining-based ETFs that saw an up-day on Wednesday include the Market Vectors Junior Gold Miners ETF (GDXJ) and the Global X Silver Miners ETF (SIL), which gained 2.8% and 2.9%, respectively, that day. The mining-based stocks that remained the biggest gainers include Sibanye Gold (SBGL), Pan American Silver (PAAS), and Yamana Gold (AUY).
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