By: Treasure Coast Bullion Group -

Gold prices are nearly unchanged for the week, as the global economy begins to slow. Volatility continues to remain a factor as the White House and China wrestle over a possible trade war. Trumps negotiating style is different from nearly all prior Presidents of the United States, and the markets will need to get use to his knee jerk reactions. U.S. jobs data was disappointing, and growth in jobs has moderated back to the long-term mean. European data was also weaker than expected, and while inflation has picked up, its well below the European Central Banks target. Prices will likely remain range bound, but the soft jobs data in the U.S. will likely generate a further decline in yields, which could weigh on the dollar and buoy gold prices.

The Unemployment Report Underscores Weak Jobs Data

The first week of the second quarter saw the release of a deluge of jobs data, which was softer than expected. The week was headlined by the non-farm payroll report which increased 103k, with earnings up 0.3% and the unemployment rate at 4.1%. Expectations were for an increase of 180K jobs. The February payroll report experienced an upward revision to 326K from 313k but January's 239k was reduced to 176k for a net 50k jobs decline. Weather was a factor during a cold March as approximately 160K people could not go to work and another 1,088k who could only find part time work. February's 0.1% rise in earnings was not revised, nor was the 0.3% January gain. The 12-month pace edged up to 2.7% year over year from 2.6% year over year.

The unemployment has now held at 4.1% since October. The labor force fell 158k after the 806k February jump, with household employment down 37k from the 785k surge. The labor force participation rate dipped to 62.9% from 63.0%. Private payrolls increased 102k versus 241k in the ADP report released earlier in the week, with an 15k gain in the goods producing sector, while construction fell 15k.

Jobless Claims Increased

The jobs report is a backward-looking report. Unemployment claims represent the most up to date view of the jobs data. Claims remain low but bounced off 44-year lows. U.S. initial jobless claims climbed 24k to 242k in the March 31 week. That follows the 9k drop to 218k in the March 24 week. The Easter holiday may have distorted the data and the 4-week moving average rose to 228.25k from 225.25k. Continuing claims dove 64k to 1,808k in the March 24 week, the lowest since December 1973.

Layoffs Increased

U.S. Challenger jobs reported showed that layoffs increased by 25k in March to 60.4k, after falling 9.3k in February to 35.4k. That's the highest monthly total since April 2016. Retail led the increase in announced job cuts with 28.9k. Store closings was the number one reason, with restructuring coming in second. Announced hiring’s fell 125.4k to 14.5k, which is also an ominous sign.

European Data is Slipping

European data was soft, with producer sentiment reports coming in weaker than expected. It’s hard to see the ECB changing to a neutral stance, with inflation also remaining subdued. The ECB is scheduled to terminate their bond purchase program in September, but recent data points could alter their thinking. The soft data was headlined by German orders which came in weaker than expected. German manufacturing orders rose 0.3% month over month in February. The annual rate fell to 3.5% year over year, down from 8.6% year over year in the previous month. Import orders dipped 1.4% month over month, export orders rose 1.4% month over month. The strong winter may have impacted February numbers.

With the U.S. and Europe both experiencing soft pocket in increasing growth, its unclear which will decelerate the most which will contribute to the direction of gold. If the U.S. declines more, gold prices will likely rise.

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Good Investing,

Treasure Coast Bullion Group