by Craig Hemke, Sprott Money:
As January ends and February begins, the calendar has suddenly gotten very busy in terms of news events that will impact the COMEX gold price. Whether that impact will be positive or negative remains to be seen.
Let’s start with the economic news pending for Tuesday. The monthly JOLTS jobs data has long been a driver of intraday volatility for the precious metals, and when it’s released on Tuesday, you can be certain that prices will once again be “jolted”. Why? This report measures trends in hiring and firing, and with the U.S. jobs market reportedly remaining “strong”, traders look to the JOLTS report for early warning signs in total employment.
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Wednesday brings the conclusion of the January FOMC meeting, but before we get there, we’ll also have an employment update from the monthly ADP survey as well as the Chicago Purchasing Managers Index. However, it will be the FOMC meeting that really shakes things up.
While there is a 98% chance that the Fed will hold the fed funds rate unchanged, what Jerry Powell says and how he says it will make all the difference. As of Monday, the 29th, there’s about a 50/50 chance that the Fed will begin cutting the fed funds rate at the next FOMC meeting in March. Where will those percentages stand by late Wednesday? If the percentage likelihood of a rate cut moves higher and toward 60%, then you can expect the COMEX gold price to rally.
There’s no relief from the news on Thursday, as that day will bring the latest update on the manufacturing sector in the U.S. with the release of the latest PMIs from S&P and ISM. Because of the way this data is computed, the recent supply chain bottlenecks due to the conflicts in the Red Sea may actually lead these two reports to mistakenly show a surge in activity and a return to “growth”. If that happens, don’t be fooled and do some research on your own. Again though, don’t expect any break from the volatility on Thursday either way.
And then Friday brings the latest update on the U.S. employment situation with the latest official jobs report—or what we call at my website, the “BLSBS”. It is becoming clearer and clearer that the monthly new job totals are being manipulated for perceived political gain. How can I say that with certainty? Of the eleven monthly totals reported thus far for 2023, TEN have been revised lower in later reports.
So, first of all, do not be fooled by the headline numbers and the mainstream media reporting. Dig deeper and be sure to note how many “new jobs” are due to simple statistical guesswork and modeling. Additionally, be sure to note how many full-time jobs are added versus part-time. In recent reports, new part-time jobs have been exceeding the losses of full-time jobs, allowing the BLS to report a NET GAIN of jobs. Watch for that again with this next report.
However, the non-thinking HFT computers won’t do any of that digging into the details. Instead, they’ll simply scan the headlines and then watch for a reaction in the bond market and dollar index. If the “new jobs number” comes in above expectations, expect bonds to sell off and the dollar index to rally regardless of the job quality and how many December jobs are revised away.
