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Gold Price Prediction – Prices Drop and Momentum Reverses on Robust US Jobs Growth

The unemployment rate returned to historical lows
David Becker

Gold prices dropped on Friday in the wake of a stronger than expected US jobs report. Both non-farm payrolls and the unemployment rate beat expectations, while consumer sentiment came in stronger than expected. US yields moved higher following the solid jobs number, and the dollar gained traction paving the way for lower gold prices. China announced today that it would wave some of the soybean tariffs that it imports as a sign of good will.

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Technical Analysis

Gold prices dropped on Friday, pushing through support near the 10-day moving average at 1,464 and testing an upward sloping trend line that comes in near 1,454. Resistance near the 50-day moving average near 1,482. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal reversing the recent rise in the fast stochastic. The fast stochastic reversed lower just above the overbought trigger level. Medium-term momentum is turning neutral as the MACD (moving average convergence divergence) histogram prints in the black with a downward sloping trajectory which points to consolidation.

Jobs Growth Surges

The Labor Department reported on Friday that November non-farm payrolls increase by 266,000 and the unemployment rate fell to 3.5. Those totals easily beat expectations which were for a rise of 187,000 and an unemployment rate that remain unchanged from October’s 3.6%. The decline in November’s jobless rate came amid a corresponding 0.1 percentage point drop in the labor force participation rate, to 63.2%. Average hourly earnings rose by 3.1% from a year ago, while the average workweek held steady at 34.4 hours.

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