The KGX (Kitco Gold Index) illustrates this point well. Today for example spot gold earned $5.60, with only $0.40 added through trading activity. The remaining gain of $5.20 was a direct result of dollar weakness.

Based on gold futures, the most active contract in April 2022 posted a net gain today of $5.70, an increase of 0.32%. This happened as the dollar declined, dropping 0.39%. The dollar index is currently pegged at 95.995.

Yesterday April gold gained $4.90 closing at $1,801.30, a net increase of 0.27%. At the same time, the dollar index lost 0.29%. On Monday, April Gold gained $11.10 and closed at $1797.70, a net gain of 0.62%. Simultaneously, the dollar fell by 0.63%. The overwhelming majority of the gains seen since Monday have been a direct result of the dollar losing almost the exact percentage decline of gold’s percentage gain.

While it is not unusual for dollar strength or weakness to be a component of gold price change, it is unusual to see the dollar accounting for the overwhelming majority of gold’s net change. Dollar strength was an important component of gold prices from mid-January until January 28, when the dollar hit its highest trading value (97.375) since November last year. However, during this period, gold prices remained stable, with the largest daily gain of $31 occurring on January 19. Many days in January contained dollar strength and rising gold prices simultaneously.

A report on ADP’s unexpected jobs today

Today’s ADP jobs report is estimated to indicate that an additional 200,000 jobs were added to the private sector last month. That’s according to a poll by the Wall Street Journal. However, for the first time since December 2020, today’s employment report revealed a loss of jobs over this period. Today’s ADP report showed private payrolls fell by 301,000. About half of the 300,000 job drop was due to the effect of the pandemic on the leisure and hospitality sector with a loss of 154,000 jobs.

According to CNBC, the vast majority of companies cut jobs in January due to the release of the omicron variant. On Friday, the US Department of Labor will release the Nonfarm Payrolls report for January, which is currently expected to arrive with 150,000 additional jobs added last month. However, based on today’s ADP numbers, we could be in for a heck of a surprise.

Wishing you as always good exchanges and good health,

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Gary S. Wagner