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David Becker

 

Gold prices moved higher on Friday, despite a stronger than expected US non-farm payroll report. US yields moved lower as the unemployment rate moved higher and the Department of Labor revised lower its 2019 levels. The dollar surged as investors continue to look for alternative currencies as the coronavirus spreads throughout China.

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Technical Analysis

Gold prices climbed on Friday, recapturing resistance which is now short term support near the 20-day moving average at 1,564.  Resistance is seen near the February highs at 1,592 and then the January highs at 1,611. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal.  The movement is choppy which likely means that gold is going to consolidate. The RSI surged higher but it is in the middle of the neutral range and reflects consolidation. The MACD histogram is printing in the red with a flattening trajectory which also points to consolidation.

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Jobs Data Was Stronger than Expected

The headline payroll number was stronger than expected, but yields dropped due to a rising unemployment rate, and revisions to 2019. The Labor Department reported that nonfarm payrolls increased by 225,000 in January, well above estimates. Expectations were for payrolls to rise by 160,000. The unemployment rate ticked higher to 3.6%, as the labor force participation rate increased by 0.2 percentage points to 63.4%. Expectations were for the unemployment rate to remain stable at 3.5%. The weather-sensitive construction industry added 44,000 positions, well above its 2019 average of 12,000. Manufacturing saw a loss of 12,000 jobs due to a drop in motor vehicles and parts.

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