Gold Jumps To Test 3-Week High On NFP Miss

New York (Jan 13)   Gold popped to retest Monday’s three-week high at 1248.40, boosted by a terribly nonfarm payrolls print. The economy added just 74,000 new jobs in December, well below market expectations that were running around 200,000, and the weakest payrolls number in two-years.

Despite the soft jobs growth, the unemployment rate dropped from 7% to 6.7% as the labor force participation rate dropped yet again to 62.8%, the lowest level in 36-years. A record 91.8 million people in America are not in the labor force.

My immediate reaction was that the FOMC should have lowered their unemployment guidance from 6.5% to 6% (or even lower!) at the December meeting, rather than just talking about it. Clearly a 6.5% unemployment rate is not going to result in a rate hike at this point. And those that had said the Fed tapered prematurely are feeling vindicated.

The Walls Street Journal tweeted the following comment, attributing it to The Economist’s Greg Ip:

“They’re going to worry that they were too quick” to taper but won’t halt the process given rising QE skepticism."