Gold gains after disappointing jobs number

In the Lead: “E Pluribus Unum”

Spot gold dealings opened with at $0.40 per ounce rise and were quoted at $1,534.70 the ounce following another overnight session of range-trading that was as exciting as watching a knitting contest in the Pyrenees. The yellow metal turned away from the $1,540.00 resistance area for the second time in one week and appeared to be looking for a source (any source) of news that might embolden the bulls into a third attempt towards the mid-$1,500 value zone. Thus far, no news of such an ilk was present. Yesterday, gold was the lone decliner in the precious metals’ complex.

Silver dropped about half-a-dollar on the open, showing a bid-side quote of $38.05 per ounce, as it too appeared to back slowly away from the strong barrier that the $39.00 level has presented up to this point. Platinum and palladium opened with mixed results for the midweek session; the former fell $1 after quite a flight on Tuesday, while the latter rose $2 seemingly still energized by yesterday’s deficit projections.

Rhodium paused at the $2,300 mark following a hefty pop in prices on the last day of May. In the background, the US dollar was marking time in and around the 74.50 level ahead of the ADP employment and the ISM’s manufacturing data. Automotive analysts are looking for car sales data from other regions to keep supporting the PGM complex in the wake of news that China’s car sales did in fact drop by 11% in April, following the expiration of government car-purchasing-oriented stimulus programs.

The private payrolls number did not lift trading spirits (at least for equities players) as it gained only a skinny number in May: 38,000 positions. Economists had expected more like 175,000 jobs to have been added to the US economy’s payrolls in the month just passed. The ISM data, due later this morning, along with light vehicle sales figures and construction spending figures for the month of April might shed some additional light on the current temperature of the US economy. As things stand right now, and based on certain recent readings of said thermometer, the school of thought that sports the “QE3” banner above its “frat house” remains in relatively good spirits.

Actually, it smells more like open warfare in QE3-related prediction-land, these days. Citigroup, for one, notes that “markets are bracing for QE3” in a fashion most reminiscent of when they were pricing in QE2 last fall. Meanwhile, JP Morgan Chase asserts that the Fed is “very, very unlikely to launch another round of asset purchases.”

JPM Chase feels that the potential political fallout (of the worst kind) that would follow the announcement of any such stimulus would make last fall’s display of anger aimed at the Fed on Capitol Hill seem like a 1967-vintage love-in. Not only are lawmakers spooked by the rising spectre of inflation but the approaching date of the US debt limit’s ceiling will have most of them turn reluctant to sanction such further monetary largesse. As Fed policy has gone, so has the greenback, that’s an open & shut case.

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