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David Becker
Gold Consolidates Ahead US Employment Report; Trump Tweets Again
Gold Consolidates Ahead US Employment Report; Trump Tweets Again

Gold prices traded on the defensive on Friday, following a stronger than expected US payroll report and very weak German manufacturing. US yields surged higher buoying the US dollar which paved the way for lower gold prices. The payroll report caught the market offguard following a worse than expected private payroll report releaed by ADP earlier in the week.

Technical Analysis

Gold prices tumbled on Friday, in the wake of the US payroll report and the German manufacturing report. Prices dropped 1.3%, but finished off session lows. Resistance is seen near former support at the 10-day moving average at 1,410. Support is seen near the July lows at 1,381. Medium term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

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US Payrolls Surge Higher in June

US job growth unexpected rose more than expected according to the US Department of Labor. Non-farm payrolls increased by 224,000 jobs which was the best result since January. This compared to expectations that payrolls would increase by 165,000 jobs. The May payroll report was revised slightly lower to 72,000 from 75,000. The unemployment rate edged up to 3.7% as labor force participation rose. Expectations had been for the unemployment rate to remain unchanged at 3.6%. As more people started looking for jobs, the rate moved higher.

Separately, the Euro was weighed on by a worse than expected German manufacturing report releaed on Friday. The 2.2% overall drop month over month was far worse than the 0.2% fall predicted by economists. The year-on-year decline of 8.6% was the biggest in almost a decade.

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