Gold & Silver Daily Market Recap: October 5th, 2012

The most anticipated day of the month for the market always presents fireworks. The release of the August Nonfarm payrolls (NFP) and the unemployment number did not disappoint this time around.

NFP increased by 114,000 in September vs. 144,000 in August, and remained in line with expectations.  The greatest shock to the market was unemployment rate dropped to a 44-month low of 7.8% from 8.1% previously. Most have pegged this reason as many people dropped out of the labour pool, meaning that most have given up on finding employment. The metal reversed direction after the metal took flight in early trade to $1795. The release of the report saw sellers emerge and the yellow metal quickly retraced to $1780. The positive report doesn't mean that the Fed's won't release QE3, it now just puts in doubt the duration of how long QE3 will be implemented.

September saw the US Federal Reserve announced it would make open-ended purchases of $40 billion of mortgage-backed securities each month until there is sustained improvement in the labour market. One positive job report does not mean that the economy is back on track.

In the wake of the positive data the Euro remain strong vs. the dollar trading around the 1.3035 level. Expect to find support around the 1.2950 level and resistance at 1.3130.

Despite the positive jobs number things remain shaky not just for the U.S but the Eurozone remains a concern. Going forward the U.S still has a number of issues before hand including the fiscal cliff; fiscal cliff refers to a large predicted reduction in the budget deficit and a corresponding projected slowdown of the economy if specific laws are allowed to automatically expire or go into effect at the beginning of 2013. Investors are going for gold as their top commodities choice in what looks like a turbulent fourth quarter for the sector. Precious metals remain the choice for investors with large funds still remaining on the sideline for the last quarter. expect some of that sideline money to flow into metals.

Spot silver remains a struggle to push past $35.60, the metal sold off to $34.22 after the positive U.S data. The grey metal found support sub $34.30 to bounce back on the day. Look for China to return to the market next week which should see volumes increase. The gold silver ratio remains well entrenched in its range of 51.60 to 50.40. A break of either side of these levels will yield the direction for the metals in particular silver.
 

October 5th Closing Prices