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Gold price sells off sharply after strong U.S. jobs data

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(Kitco News) – Gold and silver prices are solidly lower in early U.S. trading Friday, in the immediate aftermath of a strong U.S. employment situation report from the Labor Department that falls squarely into the camp of the U.S. monetary policy hawks. April gold was last down $20.60 at $2,050.50. March silver was last down $0.496 at $22.74.

Friday morning’s much-anticipated monthly U.S. jobs report from the Labor Department showed January non-farm payrolls up a much-higher-than-expected 353,000, versus expectations for rise of 175,000. The December report saw non-farm payrolls revised to up 333,000 from the originally reported gain of 216,000. The overall unemployment rate in January was 3.7% compared to forecasts of a rate of 3.8%. The strong jobs report now likely takes March and maybe even May FOMC interest rate cuts off the table, according to many market watchers.

The U.S. dollar index rallied on the jobs news and is trading solidly up on the day, while U.S. Treasury yields ticked higher. The yield on the benchmark U.S. Treasury 10-year note is presently fetching 3.982%.

Asian and European stock markets were mixed to firmer in overnight trading. U.S. stock index futures are set to open firmer when the New York day session begins.

Here are some overnight news headlines of note: “Oil prices gain on report OPEC to maintain voluntary price cuts”—Barrons. “Food prices fell 1% in January, United Nations FAO says”—Dow Jones Newswires. “Beijing is pledging more fiscal support”—Wall Street Journal. “Bank of England holds key rate, signals ’24 cut.”—WSJ.

The other key outside market today sees Nymex crude oil prices slightly lower and trading around $73.25 a barrel.

Other U.S. economic data due for release Friday includes manufacturers’ shipments and inventories and the University of Michigan consumer sentiment survey.

Technically, the gold futures bulls have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at the overnight high of $2,074.70 and then at this week’s high $2,083.20. First support is seen at this week’s low of $2,037.70 and then at the January low of $2,023.30. Wyckoff’s Market Rating: 6.0.

The silver bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $23.72. The next downside price objective for the bears is closing prices below solid support at the October low of $21.17. First resistance is seen at $23.00 and then at this week’s high of $23.445. Next support is seen at this week’s low of $22.605 and then at $22.25. Wyckoff’s Market Rating: 3.5.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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