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Gold Price Prediction – Prices Consolidate Following Robust US Payroll Report

By:
David Becker
Published: Feb 1, 2019, 20:36 UTC

Gold prices slip on strong jobs data

Gold Bars and Dollar

Gold prices moved lower on Friday as traders took profits, and the dollar moved higher following a stronger than expected payroll report. Some view the report as mixed, as the unemployment rate ticked up but the large increase in corporate survey headline number shows that job creation remains strong. Yields moved up, and riskier assets moved sideways.

Technical Analysis

Gold prices moved lower on Friday, making a lower high and a lower low as prices ran out of steam. Support is seen near the 10-day moving average at 1,300, with additional support near the 50-day moving average at 1,266. Resistance is seen near the monthly highs that coincide with the May highs near 1,325. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 88, above the overbought trigger level of 80 which could foreshadow a correction. The MACD histogram is printing in the black with a decelerating trajectory which points to consolidation.

Jobs Growth Surged

US jobs increase by 304k above expectation.  The rise was somewhat offset by a 70k net downward revision of the past two month. Most of the revision was in December which dropped by 90k.  The participation rate edged higher to 63.2%.  The unemployment rose unexpectedly up to 4.0% from 3.9%.  Manufacturing added 13k jobs.  The underemployment rate increase to 8.1% from 7.6%, which could partly reflect the contract workers for the federal government, and hourly earnings increased by 0.1%. The year-over-year pace slipped back to 3.2% from a revised 3.3% in December. The US created an average of 241k jobs over the past three months.  That matches the highest since last June. However, the Fed’s dovish tone will make it so the  jobs report will not boost the chances of a rate hike in the next several meetings, which should continue to buoy the yellow metal.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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