The actions and statements of the United States Federal Reserve are important to precious metals investors because the Fed controls key market variables: Interest rates, the Dollar, and overall economic conditions. Generally, rate hikes are bad for gold investors because high rates send the Dollar and Treasury yields up, putting pressure on precious metals.
Last week, Janet Yellen, leader of the Fed, made it clear that she is planning to raise rates this month of March 2017. The rate hike decision will largely depend on the strength of the U.S economy as measured by the economic data reported this month.
United States Jobs Report
The United States gets its first jobs data from the ADP, a payroll processing firm covering a statistically useful sample of the entire population. The ADP data is a preliminary indicator of what to expect in the official report from the U.S Labor Department on Friday, March 9th.
"Hiring by U.S. private employers surged in February, suggesting that the economy remains on solid ground even as growth appears to have slowed further in the first quarter. The ADP National Employment Report showed on Wednesday that private payrolls grew by 298,000 jobs last month, well above economists' expectations for a gain of 190,000. January's private payrolls gains were revised up to 261,000 from 246,000."
Conclusion.
Friday's official job data will be the final piece of information the Federal Reserve will use in its March 15th rate decision. The ADP data suggests jobs are surging, and the Government numbers will probably follow this bullish trend. As a result, the Fed will most likely increase interest rates this month, and this expectation is exerting downward pressure on precious metals prices.
