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Gold was as high as $1,214 overnight but of course came under pressure after release of a better-than-expected U.S. jobs report…as of 8:00 am Pacific, bullion is off $21 an ounce at $1,193…Silver is down 32 cents at $16.78…Copper is up 2 pennies to $3.03 after dipping below $3 a pound for the first time in 5 months yesterday…besides growth concerns in the euro zone and Asia, also weighing on Copper prices is a continuing Chinese investigation of the financing arrangements that use Copper and other commodities as collateral…Chinese authorities last week said they uncovered nearly $10 billion in fraudulent trade-financing deals, redoubling investors’ concerns about overall Copper demand from China…Crude Oil is off $1.29 a barrel to $89.72 while the U.S. Dollar Index, en route to a record 12th straight weekly advance (how many more weeks can this keep going up?), has surged by more than a full point to 86.68…

The robust U.S. jobs report increases the likelihood that the already overbought Dollar Index will push even higher and test very stiff resistance between 88 and 89 (see updated chart below)…Gold bulls will be able to take great comfort if bullion is able to hold support at and above last year’s low ($1,180) in the face of such a power display by the greenback…bears will attempt to push Gold below $1,180 in order to trigger stop-loss orders…next week should be interesting…extreme market conditions certainly create opportunities…

HSBC metals analysts have downwardly revised their price forecasts for Gold and Silver in response to the bank’s foreign-exchange forecasts released this week…the forex team says “we are only at the early stages of a U.S. Dollar bull run.  We have changed our average (Gold) price forecast for 2014 to $1,265/oz from $1,292/oz, previously,” they stated.  “For 2015, we envisage a trading range of $1,120/oz to $1,225/oz, with an average price of $1,175/oz U.S.”

The Federal Reserve’s third round of bond buying had a better than expected impact on the U.S. labor market, a Fed official said yesterday, making it all the more necessary for the central bank to move faster with hiking interest rates…St. Louis Fed President James Bullard pointed out that the economy has exceeded the economic forecasts the Fed presented in September 2012 when the central bank’s latest bond buying program (QE3) was launched.  In prepared remarks for a business event today, Bullard stated, “The policy rate normalization process remains far behind the schedule laid out at the launch of QE3.”

Today’s Markets 

Asia

Ahead of the U.S. jobs data, Japan’s Nikkei average climbed 47 points overnight…trading volumes in Asia were once again light with Shanghai, South Korean and Indian markets shut…

Europe

European markets are up sharply in late trading overseas, thanks to the U.S. jobs report, though the German DAX is closed for a national holiday…business activity in the euro zone fell to a 10-month low in September as the downturn in two of the region’s biggest economies – France and Italy – continued, according to data published today…Markit’s composite PMI, which combines activity in the manufacturing and services sector, fell to 52.0 from 52.5 in August…in another clue yesterday that deflation is a growing concern in the euro zone, the region’s PPI was down 0.1% in August from July, and down 1.4% year-on-year…

North America

The Dow is 128 points higher as of 8:00 am Pacific following an intra-day reversal yesterday and this morning’s robust jobs report (248,000 vs. an estimated 215,000)…the S&P 500 is up 16 points at 1962…the S&P sliced through its 100-day moving average (SMA) Wednesday, and that has typically been a great entry level into this market going all the way back to 2011…yesterday it looked primed to have its first 4-day losing streak of the year before a late-day reversal…

The TSX is up 62 points as of 8:00 am Pacific while the Venture has added a point to 879…the Venture has declined in 13 out of the last 14 sessions (20 out of 23 since the beginning of September) and is trying to emerge out of deeply oversold conditions after hitting an intra-day low of 872 yesterday…

VIX Updated Chart

Below is a 6-month daily chart for the VIX – the Volatility (“Fear”) Index which hit an important resistance band yesterday between 17.5 and 18.0 as the S&P 500 reversed intra-day (same event occurred in August)…the VIX is a key measure of market expectations of near-term volatility conveyed by the S&P 500…what it really does is measure the cost of ensuring your stock portfolio…the higher the VIX goes, the more expensive it is to ensure your portfolio…looks like the VIX will settle down and head lower over the coming days, paving the way for a move higher in the broader equity markets…

U.S. Dollar Index Updated Chart

An early clue that the U.S. Dollar Index was headed higher (major trend change) came in July when it broke above an RSI(14) downtrend line in place since early 2013 on this 2.5-year weekly chart…the Index is now riding a wave of momentum which can only lead to a significant correction, given current overbought conditions, but it seems even more likely now that the Index won’t back off in a big way until it attempts to at least push through Fib. resistance at 88…there is also chart resistance at 89…

TSX Updated Chart

The drop in commodity prices has also affected the TSX which has fallen below an upsloping channel in place since last year as you can see below…the near-term challenge for the Index is to reclaim the 15000+ area as 15000 has become new resistance…the rising 200-day SMA (14673) provided support yesterday while additional support exists around 14200…

Yamana Gold Inc. (YRI, TSX) reported this morning that the company achieved record quarterly production in the third quarter in excess of 390,000 Gold equivalent ounces at all-in sustaining cash costs within annual guidance of between $825 and $875 per GEO…

After a 4-year development period, Goldcorp Inc. (G, TSX) has poured first Gold at its Éléonore Mine in the James Bay region of northern Quebec… President & CEO Chuck Jeannes highlighted the work done with aboriginal communities in the area regarding the smooth transition from development, construction and now production – on schedule and in line with the company’s capital cost guidance…Eleonore is expected to produce 600,000 ounces of Gold annually once production is fully ramped up to throughput of 7,000 tons per day in 2018…Virginia Mines Inc. (VGQ, TSX) owns a 2.2% NSR on the first 3 million ounces of Gold produced at Éléonore mine…this royalty will increase according to the number of ounces of Gold produced but shall not exceed 3.5%…

Venture Updated Chart

The Venture’s slide of nearly 15% in just over four weeks has created extreme oversold RSI(2) conditions on this 1-year weekly chart, raising the possibility of a near-term rally…-DI has also been pushed to an extreme level, above its previous high…the recent drop below the uptrend line at 918 was a warning sign of more weakness to come with the 860 area – the low following the 65% correction from the 2011 high – the next major support…

Calibre Mining Corp. (CXB, TSX-V) Update

When you see an exploration stock hold up well in the current Venture environment, you know you’re looking at a quality opportunity…there are some out there – Calibre Mining (CXB, TSX-V) being one of them…CXB attracted a major new investor (Peter Lassonde) recently as it continues to enjoy success in Nicaragua…

On Monday, the company announced the next phase of exploration activities (25-line km ground magnetic survey and trenching) at its 100%-owned Montes de Oro Gold Project in the Siuna district…Montes de Oro is a promising high-grade skarn system…in addition to Montes de Oro, Calibre is actively exploring two extensive Gold systems in Nicaragua with partners B2Gold Corp. (the Minnesota Gold discovery) and Iamgold Corp. (the ongoing drill program at the Eastern Borosi Project)…

CXB is higher for the week, attempting to overcome chart resistance at 15 cents…as of 8:00 am Pacific, it’s off half a penny at 15.5 cents…technically, looking at this updated 2.5-year weekly chart, the question is how long these temporarily overbought conditions can persist…the 15-cent area will either remain as resistance for a while, or it’ll become new support after a breakout higher…as always, perform your own due diligence…

Note:  John, Terry and Jon do not hold share positions in CXB.