Gold Price Prediction – Gold Surges on Weak Payroll Data

Gold prices rebounded sharply on Friday following a much softer than expected US jobs report. The jobs number was mixed, as the unemployment rate dropped and the real-employment rate declined. While the dollar lost some traction against most major currencies, gold prices surged, as traders looked at gold now as the most stable currency. With the ECB bringing back TLTRO loans, and US yields declining, gold should continue to benefit.

Technical Analysis

Gold prices surged higher rising to resistance which is seen near the 10-day moving average and the 50-day moving average at 1,302. The 10-day moving average is crossing below the 50-day moving average which means that a short-term downtrend is now in place. Short-term momentum is turning positive as the fast-stochastic is generating a crossover buy signal in oversold territory. The current reading on the fast stochastic is 14, below the oversold trigger level of 20 which could foreshadow a correction.

Payrolls Rise Less than Expected

Non-farm payrolls rose by 20,000 jobs in February according to the Labor Department. Expectations had been for a 185,000 rise. Most of the declines came in the construction sector, which saw a low of 31,000 jobs. February was colder than normal month with temperatures dipping in Chicago to less than -24 F. This could have created a headwind for construction jobs which might be revised. The report completely missed expectations but follows January’s surprisingly strong 311,000 payrolls, which were revised higher by 7,000 workers. The unemployment rate also fell by 0.2% point to 3.8% and average hourly wages grew at an annual pace of 3.4%. There were declines of 13,000 jobs in both civil engineering and specialty trade contractors. The only outperforming sector was financial and services. A positive in the report was the real unemployment rate, called the U-6, which dropped to an 18-year low of 7.3% from 8.1% last month. That number includes discouraged workers as well as those holding jobs part time for economic reasons.