Gold Price Prediction – Prices Rise as Yields Tumble Following Jobs Report

Gold prices rebounded on Friday after testing target support. The dollar whipsawed following but edged higher as riskier assets gained traction.   Yields moved lower, following a softer than expected non-farm payroll report. The yield curve experienced a wild ride this week dropping 20-basis points which foreshadows slower growth. The Fed saying this week that they plan to unwind their bond purchase program put the fear of tightening into the short-end of the yield curve. Risk assets tumbled with stocks getting hammered, which helped buoy the yellow metal.

Technical Analysis

Gold prices rebounded just above the November lows which is support at 1,758. Resistance is seen near the 10-day moving average at 1,785. The 10-day moving average has crossed below the 50-day moving average which means at a short-term downtrend is in place. Medium-term momentum has turned negative as the MACD (moving average convergence divergence index) generated a crossover sell signal. This scenario 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. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold as the fast stochastic is printing a reading of 16, below the oversold trigger level of 20.

Payrolls Rise Less than Expected

Nonfarm payrolls increased by just 210,000 for the month compared to expectations of a rise of 550,000. The unemployment rate fell sharply to 4.2% from 4.6%, even though the labor force participation rate increased for the month to 61.8%, its highest level since March 2020. The household survey painted a brighter picture, with an addition of 1.1 million jobs as the labor force increased by 594,000.