Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dropped 1.9% after another poor U.S. jobs report and deterioration in the eurozone pushed worried investors further into cash and Treasurys. Gold initially spiked higher on speculation that the jobs data could trigger another round of quantitative easing from the Fed. But rising yields on Spanish debt caused the euro to sell off, driving the dollar to a two-year high and smothering gold's rally. Equities and commodities also fell, with the Dow losing nearly 1%, the Global Dow 1.25%, and oil 3.5%. After gaining 3.5% last Friday, gold finished this week with a 1.6% loss. Silver fell 2.7% for the day and 2.4% for the week. Platinum and palladium were down 1.9% and 0.9% today, respectively, and posted a weekly loss of 0.7%.

At the close: August gold fell $30.50 to $1,578.90; September silver lost 75 cents to $26.92; October platinum dropped $28.20 to $1,449.50; and September palladium slid $5.40 to $580.35 an ounce.

While today's non-farms payroll report is not disastrous, it's pretty bad. The economy added merely 80,000 jobs, well short of the 100,000 projected and only 3,000 more than the May report, which was viewed as terrible. National unemployment remains stuck at 8.2%, the high end of the Fed's recently-downgraded projection of between 8% and 8.2% for the rest of the year. In late April, Fed Chair Ben Bernanke said job growth of 150,000 to 200,000 per month is needed to lower the unemployment rate. Clearly, the current job market falls woefully short.

Considered alongside recent slowdowns in manufacturing, the service sector, retail sales, and consumer confidence, today's poor payroll report is yet more evidence that the U.S. economy�like the rest of the world's�is stuck in a quagmire. The pressing question for gold traders is whether growth is slow enough for the Fed to undertake deeper policy accommodations, like its central-banker counterparts this week in Europe and China, to get it moving again. Speeches by FOMC members over the next few weeks will no doubt give some direction on this subject. Today's initial reaction by the gold market, before the plummeting euro reversed gold's gains, would seem to indicate that traders see QE3 getting closer after this week's soft data.