Gold and silver were said to have been “hit hard today in honor of the non-farm payrolls report. It sent gold negative for the year, with the spot price falling as low as $1,189 on Friday before ending off 1.8%, on a report that was described as both “beating expectations,” and “ugly,” notwithstanding the “joyous headlines” on Fox Business and CNBC. The 248,000 new jobs went inordinately to workers in the youngest and oldest age groups, wage gains continued to be stagnant, and the number of those that have checked out of the labor force hit a record high.
“Strengthening payrolls are going to add the perception that the Fed is going to raise rates sooner,” said one research analyst quoted by Bloomberg, a perception he sees as “negative for gold.” But with the latest round of QE winding down, it’s also argued, in a cogent analysis at TF Metals Report, that “Without the constant dump of fresh greenback into the global banking system, we are right back to where we were in 2008. Namely, deflation.” And while this will initially drive metals lower, the Fed, with its stated mission to prompt unemployment and inflation, “will be forced to act … Deflation is their number one enemy and they will do anything (and this includes QE4) to avoid it!”
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