Gold & Silver Daily Market Recap: September 7th, 2012

The market question is QE or no QE, after today it would seem that the market is fully expecting QE. Spot gold rallied $40 to its highest level in 6 months to $1742 amid poor  U.S Nonfarm payrolls.

The  market rally was brought on by the release of NFP which was expected to show an increase of 123,000 jobs in August, but fell far below expectations and only creating 96,00 down from 163,000. This spurred buying in all commodities across the board. Spot gold rallied through resistance of $1725 as buyers returned to the market in furry. Now the question on everyone’s mind will be what the Fed decides to do with this information in their upcoming monetary policy decision on Thursday of next week.  The Unemployment Rate actually fell from 8.3% to 8.1%. The main driving reason for the decline has to do with the participation rate, which fell again down to 63.5% from 63.7% the month prior.  The Participation Rate is the share of working-age people who are either working or looking for work,  approximately 2.5% of the US population has either decided to no longer look for work, retire, or have run out of unemployment benefits over the last four years.

Stimulus has been the talk around the world with China announcing further stimulus of a trillion yuan ($155 billion) worth of infrastructure projects was announced earlier today. The money will be used to build highways, waterways, urban rail projects and waste water treatment plants. Yesterday we saw Draghi announce “Outright Monetary Transactions".

Spot silver took flight rallying alongside gold to $33.73 adding 3.3% from the previous day's close. The closely watched gold silver ratio remains well supported at 51.50 unable to break through. Further stimulus at the Fed meeting next week should ultimately drive the ratio lower, meaning that silver will again outperform gold.

It has been a wild week in the metal space with gold rallying from $1675 to $1742 and silver from $31.80 to $33.73. Expect more of the same next week as all eyes focus on the Fed meeting. expect action to be choppy and we are at lofty levels now expect for the metal to retrace slightly as we currently sit at overbought levels. We are firmly entrenched in a bull market a close below $1630 and $31.80 would shift the market back to negative.

September 7th Closing Prices