Investors turn to gold as a safe haven investment when the economy is in poor shape. Therefore, people who trade gold should be on the lookout for any indicators that the economy could pick up, as this can drive the price of the precious metal down.
One factor that could decrease gold demand is a strong employment report for April. The Department of Labor has yet to release its figures, but ADP’s National Employment Report is generally a good measure, and it revealed strong growth.
In April, 220,000 jobs were created, which is much higher than the 12-month average, according to ADP CEO Carlos Rodriguez.
“The job market is gaining strength,” said Mark Zandi, chief economist at Moody’s Analytics. “After a tough winter, employers are expanding payrolls across nearly all industries and company sizes. The recent pickup in job growth at mid-sized companies may signal better business confidence. Job market prospects are steadily improving.”
Another factor that is pushing gold down is speculation that the Federal Reserve is going to continue with plans to cut monetary stimulus.
“The gold market knows that the Fed will not change the course of the stimulus slowdown,” Adam Klopfenstein, a senior market strategist at Archer Financial Services in Chicago, told Bloomberg. “There is a lack of conviction in the market.”
Gold investors will want to keep an eye on a number of things moving forward. In addition to a positive jobs report, any announcement that the fed is going to change monetary stimulus could create market volatility – all important information for gold traders.
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