Gold and silver are well on their respective ways to a positive week this week as both metals made substantial gains early in the day on Tuesday. While the government shutdown and its impact on the economy is an underlying positive for precious metals, the latest US jobs report helped push gold and silver forward more dramatically.
The weaker than expected US jobs data is positive for precious metals because it greatly alters the Fed's stance on monetary policy. Even though the shutdown is behind us, its affects will likely be felt for some time.
Weaker September Jobs Report
The government shutdown negatively impacted many financial markets as well as the daily lives of thousands. Not only that, but the shutdown also prevented many economic reports from being released on time. One of the most important foregone report was the employment report from September. Today, however, the long overdue jobs data from September was finally released.
Though experts were expecting to see non-farm payrolls rise by almost 200,000, the actual figures came in barely over 140,000 additional jobs. This weak increase moved the unemployment rate from 7.3% to 7.2%, a modest improvement.
The larger implications of the jobs data is positive for metals as well seeing as the Fed may rethink their apparent plans to reduce QE. Before the shutdown, many Federal Reserve members commented, saying they feel as though the end of the year will be an appropriate time to wind down Quantitative Easing. Now, with the shutdown likely to hinder 4th quarter growth, and jobs data coming in weaker, the chances of the Fed altering monetary policy before the year's end are dwindling.
With that being said, investors are going to quickly focus their attention on information other than the jobs data, as it is more than half of a month old. Perhaps October's data will create a different story, but for now we are forced to settle with sub-par economic conditions.