Gold Price Prediction – Gold Slides Following Robust Payroll Report

David Becker
Comex Gold
Comex Gold

Gold prices reversed course and moved lower following a stronger than expected US payroll report released by the Department of Labor on Friday.  This came in the wake of Thursday’s stronger than expected private payroll report released by ADP which failed to halt the upward trend in gold. Today’s payroll data pushed up US yields which buoyed the dollar and paved the way for lower gold prices.

Technical Analysis

Gold prices moved higher initially on Friday climbing up to 1,298 which was just shy of the June 2018 highs at 1,303. Support on the yellow metal is seen near the 10-day moving average at 1,275. Additional support is seen near the 50-day moving average at 1,237. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic is printing a reading of 89, well above the overbought trigger level of 80 which could foreshadow a correction. The MACD histogram is printing in the black with a declining trajectory which points to decelerating negative momentum.

Jobs Surged More than Expected

The BLS reported that job creation grew more than expected in December as nonfarm payrolls roseby 312,000 in December though the unemployment rate rose to 3.9%. The reason the household survey moved higher was because the participation rate increased by 0.2% to 63.1%. The participation rate is now up 0.4% year over year. A broader measure of unemployment that includes discouraged workers and those holding part-time jobs called the U6 held steady at 7.6%.

In addition to the big job gains, wages jumped 3.2% year over year and 0.4% over the previous month. The year-over-year increase is tied with October for the best since April 2009. The average work week rose 0.1 hour to 34.5 hours. Expectations were for non-farm payrolls to rise by 178,000 jobs and the unemployment rate to decline to 3.6%. The wage number also was well above expectations of 3% on the year and 0.3% from November.

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