The ADP employment report wasn't interpreted as a significant miss. The private sector added 201,000 jobs in March, in line with what analysts are expecting from Friday's jobs number. But the snag came in that February's number was revised lower from 217,000 to 208,000. "Gold buyers returned after some disappointment in the job sector that may keep interest rates down," says George Gero, senior vice president at RBC Capital Markets. The tone in the gold market was that the Federal Reserve could curb or abandon its $600 billion bond buying program, dubbed QE2, in light of better economic data, especially if the jobs landscape improved. If the jobs picture stays murky, as today's data indicates, then the trend of cheap money should continue. Also supporting gold's rally is the end of the first quarter on Thursday, which can trigger strong buying or selling from portfolio managers as they want to show they own gold or book profits from it.
"Put a feeler on both," advises Scott Redler, chief strategic officer for T3Live.com. According to Standard & Poor's, since 1975 the gold price has risen 0.9% in the first quarter but 4.3% in the second. Gold prices are relatively flat for the year. Oliver Pursche, co-portfolio manager of the GMG Defensive Beta Fund, has turned skeptical on silver. "Silver is now trading at its narrowest spread to gold prices in 27 years, and a three-decade high. In our view, the recent run up has increased the downside risk for Silver ... significantly."