Gold Prices Break Out and Close Up Nearly 4% for the Week

Gold prices broke out as geopolitics continued to drive investors into safe-haven assets. The dollar surged higher. U.S. yields moved lower despite a stronger than expected jobs report, which also showed revisions upward.

Geopolitical risks continue to buoy the yellow metal. The Fed has signaled that they will increase rates by 0.25% on March 16, and the market is taking some of the prior tightenings out.

According to the Labor Department, nonfarm payrolls for the month grew by 678,000, and the unemployment rate was 3.8. Expectations were 440,000 for payrolls and 3.9% for the jobless rate. Wage inflation stagnated. Earnings rose for the month, up just 1 cent an hour, or 0.03%, compared with estimates for a 0.5% gain. The year-over-year increase was 5.13%, well below the 5.8% estimate.

Technical Analysis

Gold prices broke out and closed at the highest level since August 2020. Gold was up nearly 4% for the week. Support near the 10-day moving average that comes in near $1,918. Resistance is seen near the November 2020 highs at 1,965. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal.

Prices are overbought. The RSI is printing a reading of 72, above the overbought trigger level of 70, which foreshadows a correction. Despite the overbought conditions the risk is to the upside.

The medium-term momentum is positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is upward sloping, which likely points to upward prices.