Gold and GLD Could See Further Losses as the U.S economy Recovers

SPDR Gold (GLD) lost over 6% off its value during September. What is up ahead for this gold ETF? Let’s review how the progress of the U.S economy may impact the direction of GLD starting with the labor market.

This week the non-farm payroll report will be released. Last month, the non-farm payroll came short at 142K jobs – well below market predictions of over 200K. The current predictions are for a gain around 213K jobs. Another issue to consider is to see of any revisions to the August figures.

If the report were to show a gain of well above 200K jobs in September and the August numbers were to be revised upward, this report could bring further down GLD on Friday.

The importance of this report is with respect to the impact it could have on FOMC members’ future decisions including the timing and pace of raising the Federal cash rate. If the labor market were to keep showing consistent job gains of over 200K per month and the participation rate were to remain stable, these factors could play in favor of raising the cash rate at a sooner date next year and at a faster pace. In such a case, GLD is likely to suffer and come further down.

The rest of this analysis is at Seeking Alpha

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