Gold fell to another 5-month low in the early parts of Friday, but quickly bounced back thanks to more bargain hunting buying. Today’s employment report for November was the most highly anticipated piece of economic data released this week, and it lived up to expectations.
Now, with plenty of economic data for investors to mull over during the weekend, the attention of the marketplace will shift to the upcoming December FOMC meeting, which is scheduled to kick off on December 16th.
November’s Employment Report
While this week was full of economic data like the ADP national employment report and the most recent US GDP report, investors valued today’s November employment report more than them all. The market was anticipating a rise in non-farm payrolls in the neighborhood of 175,000, but were shocked to see non-farm payrolls rise even more significantly. When the report was released it showed that November added over 200,000 non-farm payrolls, 203,000 to be exact.
This news almost instantly dropped gold to a new 5-month low, but the spot value of the yellow metal did not stay subdued for long thanks to bargain hunters. Now, the belief that Quantitative Easing will be tapered before the end of 2013 is as strong as it has ever been. If you look at the last few weeks’ worth of economic data, most of it has been positive,and in a lot of cases extremely positive. In the current economic atmosphere, investors are and have been interpreting any positive economic data in the US as meaning that Quantitative Easing will be tapered before the year’s end. With that being said, however, just because investors think QE will be wound down in the near future does not mean that it will be tapered before the end of the year. Even though many feel like this December FOMC meeting is the perfect time for tapering, it is just as likely that QE will be tapered in January or even February.
Though it has been off of our minds for more than a month now, the possibility of another government shutdown in the US is still looming. With the temporary budget and debt ceilings about to be reached in the near future, the prospect of another government shutdown is just as likely now as it was prior to this past October.