The top performing asset class for the first quarter of 2014 is…

Gold!  Even though the price of gold has had a rough go of it as of late, it still notched returns of 6%, which trumped the S&P 500 by nearly 5%.  This is especially impressive considering that the Federal Reserve has tapered its bond buying program over the past three months from $85 billion a month to $55 billion a month, and February’s jobs report exceeded economist’s forecasts.

Gold Coins
Gold Coins

March’s jobs report, which will be released on Friday, April 4th, has the potential to have a significant impact on the price of gold.  If the jobs report disappoints, this could indicate that there’s still structural weakness in the economy, and may cause the Federal Open Market Committee (FOMC) to temporarily suspend the tapering of their bond buying program.  Alternatively, if the jobs report exceeds expectations, this could be taken as a signal that the FOMC is on the right track, leading them to maintain or accelerate their tapering efforts.

Other factors on the horizon that may affect the price of gold are the slowdown in the Chinese economy, emerging market weakness, a steep decline in home mortgage applications, and future PMI figures.  Additionally, first quarter GDP figures, which should be available shortly, should point to the overall strength and resiliency of the U.S. economy.

Tony Davis
Tony Davis