Gold Reaction Subdued To Jobs Report And ECB Moves

  • Posted Thursday, July 03, 2014 at 08:15 PM

TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Gold and Silver prices dipped on Thursday with Gold hovering around $1,320.00 an ounce, at the time of this writing, while Silver is down slightly to $21.09 an ounce following a better than expected non-farm payrolls report showing the economy added 288,000 jobs in June, while the unemployment rate dropped two ticks to 6.1 percent in May.

Of course, some reports can be double edged swords. “The next thing is the inflation play will come in,” says Charles Nedoss, of LaSalle Futures. Details of the report revealed that average hourly earnings were on the rise after climbing another 6 cents to $24.45 following the same increase in May. An improving labor market is likely to generate more “quality jobs” at higher pay as well, adds Nedoss. “We’re going to start to be in an environment where wage pressures become a lot more important and are watched,” he concluded.

Also affecting the Gold price was the announcement by the European Central Bank (ECB) on Thursday that interest rates are likely to stay at current record low levels for an “extended period of time.” ECB President Mario Draghi, speaking at a press conference following the ECB policy meeting, made it clear once again that policymakers remain willing to put in place unconventional monetary policies (quantitative easing), if needed.

The ECB is also planning to cut its meetings to once every six weeks beginning in January, said Draghi. The bank will then meet at six week intervals like the Fed, although Draghi denied any intention to synchronize the ECB meeting schedule with the Fed's schedule. Draghi left interest rates unchanged, with the main refinancing operations rate at 0.15 percent, the marginal lending facility at 0.40 percent and its deposit facility at negative 0.10 percent to spur lending.

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