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David Becker
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Gold prices continued to remain buoyed after rallying on Thursday following the Fed’s interest rates decision. For the week gold has increased by 3.9%. The dollar declined to 2-month lows and yields moved higher. US yields moved higher but this barely impacted gold following a stronger than expected US employment report.

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Technical analysis

Gold prices consolidated Thursday’s gains as gold finally broke out of a tight range. Support on the yellow metal is seen near the 50-day moving average at 1,913, and then the 10-day moving average at 1,904. The 10-day moving average is poised to cross above the 50-day moving average which would mean a short-term uptrend was in place. Short-term momentum is positive as the fast stochastic continued to accelerate higher. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

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Payrolls Rise More than Expected

US nonfarm payrolls increased by 638,000 according to the Labor Department. This is compared to a 530,000 increase expected. The unemployment rate was at 6.9%, compared to expectations that it would be edged down to 7.7%. The September level of 7.9% was unchanged. The decline in the unemployment rate came despite an uptick in the labor force participation rate that rose 0.3 percentage points to 61.7%. An alternative measure that includes discouraged workers and those holding part-time jobs for economic reasons also fell, to 12.1% from 12.8% a month ago.

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