Dennis Gartman of the eponymous The Gartman Letter noted today in his daily letter to investors that he is paying less attention to the non-farms component than others because “after eight full years of better employment data the labor pool of truly available… and importantly drug and alcohol free workers… has nearly been depleted.”  He is suggesting that businesses cannot find “usable and reliable” labor, and therefore we should pay attention to hours worked and average hourly earnings of US employment figures as good indicator of inflationary pressures which is bad for gold.  He said that a close above a gold price of $1272 or $1276 is a bullish sign on the yellow metal.

“Turning to gold, it is firmer today although it is having trouble pushing upward through resistance in the spot at the $1272-$1276 level, which has served as strong resistance for the past two weeks. Technically a close above that resistance… even by the barest of margins… would be a powerfully bullish signal. Indeed we are reminded of one of the rules of trading established by the great Richard Dennis who fearlessly bought almost any and all markets that closed at new, interim highs for the week. He made his “name” in the business of trading doing just that… and very effectively!

Much may depend upon today’s Employment Situation Report, but as noted…the proper focus should not be upon the unemployment rate, nor upon the non-farm payrolls component of the report, but should be instead upon the report on average hourly earnings. The labor pool has just about been exhausted, to the point that every businessman… or woman… that we talk with has expressed an utter and increasing inability to hire and retain good workers. Wages are rising and that shall be… or at least should be… reflected in today’s report, suggesting that inflationary pressures are building…finally.”

As it turned out, average hourly earnings for the US rose to $26.36 in July 2017 from $26.27 back in June, and $25.71 one year back in July 2016 (Source: Bureau Labor of Statistics).  Total aggregate hours increased by 0.2% over the month of July, and 2% over the year. Aggregate weekly payrolls increased 0.5% over-the-month and 4.6% over the year (Source: Bureau of Labor Statistics).  These figures point to a strong labor market which placed downward pressure on gold prices.  Gold finished down $9.70 on the day to $1264.70

Despite the fact that there was no bullish signal on gold today, Gartman is still long gold.

“We are long of gold in EUR, Yen and US dollar terms and for now we sit tight, as we have on balance for the past several years, hoping for and/or awaiting spot dollar denominated gold to take out and close nicely above $1280/oz.”

It looks like Richard Dennis and the gold bulls are going to have to wait a bit longer for bullish signals on gold.