Gold Price Prediction – Prices Dip into Range Following Robust Employment Report

Gold prices ran into resistance levels following the US jobs report which showed a larger than expected increase in headline payrolls. Additionally, wages increased by more than expected which pushed US yields higher, which raised the value of the US dollar paving the way for lower gold prices. Average hourly earnings increased by more than 3.1% which makes up 60% of corporate costs. With the dollar rebounding, it will be hard for gold to break out.

Technical Analysis

Gold prices attempted to rally touching resistance near the October lows at 1,239. Support on the yellow metal is seen near the 20-day moving average at 1,221. Additional support is seen near the 50-day moving average at 1,207. Momentum is neutral and has whipsawed. The MACD (moving average convergence divergence) histogram is printing near the zero index level with a flat trajectory which reflects consolidation. Prices have been moving sideways since the beginning of August which reflects consolidation. The fast stochastic is looking to generate a crossover buy signal which would signal accelerating positive momentum.

Jobs Data Was Stronger than Expected

US employers increased the number of jobs created in October, rising by 250K which is well more than the 160K expected. This follows September’s reported from the Department of Labor which showed that jobs numbers where revised lower by 16K to 118K. The BLS also reported that the unemployment rate was at 3.7$ which is near a 49-year low.  What surprised market participants was the robust increase in hourly earnings.

Average Hourly Earnings Increased More than Expected

Friday’s report showed average hourly earnings increased $0.05 in October to $27.30. October marked the first time since the recession ended more than nine years ago that the closely watched pay gauge rose better than 3% from a year earlier. The BLS reported that average hourly earnings increased by 3.1% year over year.