Gold loses early price gains as traders reassess US jobs data
(Kitco . News) – Went Prices lost early gains that saw the yellow metal reach a two-week high, and it is now trading near flat in late morning trading on Friday. The mixed US jobs report leads the market to end the trading week. The price of gold futures contracts for the month of December last rose 0.70 dollars to reach 1759.90 dollars. Silver Comex for December last rose $0.142 at $22.80 an ounce.
The US employment report released by the Labor Department on Friday morning saw the number of core non-farm payrolls rise by 194K, which is a strong miss forecast for a rise of 500K in September, and follows a revised rise of 366K in August. Both months saw errors in the downside from expectations. The unemployment rate in August fell to 4.8%. Some forecasters said in the immediate aftermath of the jobs report that weaker-than-expected non-farm employment numbers in August and September may prevent the Federal Reserve from reducing its monetary policy as soon as possible. However, others said that today’s overall optimistic internal data for the jobs report will not change the Fed’s tapering trajectory. But at least today’s jobs data injected more uncertainty into the market’s thinking on the matter. Judging by the reaction of the US Treasury market (yields are higher today), bond traders believe that the Fed will stay on course “sooner rather than later” to tighten US monetary policy. This is also what gold and silver traders believe as we approach midday on Friday, given that gold and silver prices are losing early gains.
Global stock markets were mixed in overnight trading. US stock indices are mixed as midday approaches. The US stock index bulls had a good few days late this week, and gains on Friday will suggest that the indices have bottomed out in the market. Traders and investors’ appetite for risk was more upbeat late this week as the US Senate approved and passed a bill to extend the debt limit through December.
Today, major foreign markets are witnessing a decline in the US dollar index. NYMEX crude futures are up, reaching a seven-year high of $80.11, and are currently trading around $79.80 a barrel. Meanwhile, the 10-year US Treasury yield is currently at 1.607% – the highest level since June.
Technically, the bears on the December gold futures contract still have the overall technical advantage in the near term. However, the four-week downtrend on the daily bar chart has been nullified. The next bullish price target for the bulls is to produce a close above the solid resistance at $1,800.00. The next near-term downside price target for the bears is pushing futures prices below strong technical support at the September low of $1,721.10. We notice the first resistance at the day’s high at $1,782.40 and then at $1,800.00. First support is seen at $1,750.00 and then this week’s low at $1,745.40. Wyckoff Market Rating: 4.0
Silver bears have a strong overall technical advantage in the near term, but prices hit a three-week high overnight and the downtrend in prices has stalled in the near term. The next bullish price target for the silver bulls is to close December futures price above the strong technical resistance at $24.00 an ounce. The next target for the bears downtrend price is a price close below the strong support level at $21.00. We notice the first resistance at the day’s high at $23.22, then $23.50. Next support is seen at today’s low at $22.435 and then this week’s low at $22.185. Wyckoff Market Rating: 2.5.
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