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Fool's Gold Report: The Waiting Game Continues for Gold

By Dan Caplinger - Feb 6, 2014 at 3:15PM

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Find out what everyone's looking forward to in the gold market.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Gold has been almost as volatile as the stock market so far in 2014, with the yellow metal off to a strong start to 2014 as investors look for the best bargain opportunities after a terrible year in 2013. Today, though, even a soaring stock market wasn't enough to push precious metals strongly in either direction as investors wait for the broader picture of the jobs market that they'll get from the January employment report tomorrow morning. April gold futures settled up just $0.30 to $1,257.20 per ounce, and March silver futures were up modestly as well, gaining $0.12 to $19.93 per ounce. Bullion ETFs traded in similar fashion, with the SPDR Gold Shares (GLD -0.65%) down 0.1% as of 2:45 p.m. EST while the iShares Silver Trust (SLV -1.72%) picked up 0.6%. Other metals were mixed, with platinum falling $4 per ounce to $1,372 while palladium rose $2 to $709.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

The main reason why metals are stuck in a rut today has to do with the uncertainty about the direction of the U.S. economy. Until recently, economic data suggested that the U.S. was firing on all cylinders, heading for a smoother recovery that would no longer require help from the Federal Reserve in order to sustain itself. But signs of a possible slowdown have made investors more cautious in their expectations of the Fed's future moves, raising the possibility that the central bank will keep at least some level of bond-buying activity for longer than previously expected. The Fed won't want to reverse course unless it becomes absolutely necessary, and it's possible that it will argue that one-time seasonal factors, rather than lasting structural changes, led to a brief interruption in the economy's growth path. But the employment report tomorrow will give policymakers a key data point to consider in their deliberations.

Mining stocks were similarly flat, with the Market Vectors Gold Miners Index (GDX -3.55%) up just a penny as of 2:45 p.m. EST. But Silver Standard Resources (NASDAQ: SSRI) continued to gain, rising another 3.6% as investors get increasingly excited about its purchase of the Marigold mine in Nevada, which will give Silver Standard a more dependable source of production to go with its Pirquitas mine in Argentina. The miner should benefit if it can get relatively high costs at the mine to fall.

Tomorrow's jobs report will likely move the stock market, but gold investors should also pay close attention. What it says about the direction of the economy could determine whether gold's rally lasts during the rest of 2014.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

iShares Silver Trust Stock Quote
iShares Silver Trust
$18.25 (-1.72%) $0.32
SPDR Gold Trust Stock Quote
SPDR Gold Trust
$164.35 (-0.65%) $-1.07
VanEck Vectors ETF Trust - VanEck Vectors Gold Miners ETF Stock Quote
VanEck Vectors ETF Trust - VanEck Vectors Gold Miners ETF
$25.78 (-3.55%) $0.95

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