Dollar Recovers Ground After NFP and Sends Gold, Metals down

Risk-Off sentiment is taking the market as the NFP report failed to move the market as the numbers were decent, mostly in line of expectations, but neither too good or too bad.
Mauricio Carrillo
Dollar Recovers Ground After NFP and Sends Gold, Metals down

Gold and other metals such as silver and copper reacted to the downside after the U.S. employment report for July.

Risk-Off sentiment is taking the market as the NFP report failed to move the market as the numbers were decent, mostly in line of expectations, but neither too good or too bad.

Investors were waiting for nonfarm payrolls as a hint to anticipate what the Federal Reserve would do in its next FOMC meeting. However, it wasn’t the case. It seems equities will be leading the sentiment in today session.

The main problem for the Fed remains the trade war as investors watched how today’s numbers confirmed that the labor market is creating jobs at an excellent pace. So, the Fed has now more time to act.

Also, remember that as a Friday, there is potential profit-taking closes that could create divergences in metals prices.

The United States creates 164K jobs in July, as expected

On Friday, the Bureau of Labor Statistics reported that the U.S. economy created 164,000 new jobs in July, a number in line of expectation with a total labor force of 163.4, a new record.

The unemployment report was reported unchanged at 3.7%, also as expected; Average hourly earnings rose 3.2%, more than 3.1% anticipated. However, Americans worked less time in July with an average weekly hour of 34.3, below 34.4.

Labor force participation rose to 63.0% in July from 62.9% in June.

With the numbers, dollar is trading positive, while gold and metals are down.

Gold reacts negatively after NFP

XAUUSD daily chart August 2

Gold is trading negative after the employment report as investors are trying to digest Fed uncertainty after NFP numbers.

Currently, gold is trading at 1,430, 0.15% negative on the day. Technical conditions for the XAU/USD are weak in the short term; however, the picture changes in the daily chart with the unit consolidating levels around 1,440. Also, the metal looks well supported by the 1,400 area.

To the upside, immediate resistances are at 1,440 and 1,455; while supports and levels to watch at the downside are at 1,400 and 1,380.

Silver extends losses

XAGUSD daily chart August 2

Silver is trading down on Friday after a brief recovery performed on Thursday. Investors are closing positions at high levels after the Fed delivered one rate cut but didn’t give any hint about new reductions.

Also, today’s employment report failed to answer questions or to give reasons for new cuts.

In this framework, XAG/USD is trading 1.23% negative on the day at 16.10 Technical picture looks bearish with the 16.00 area as the next important support. Below there, check the 15.60 and 15.10 as buying zones.

Metals report for August 2

Copper is trading negative for the fourth straight day, and it actually broke below the critical 2.5940 area, and it is now trading at 2.5820, its lowest level since January 4. Technical conditions suggest more drops in the short term with 2.5600 as the next support.

Palladium is down for the second day on Friday with the XPD/USD extending the significant losses performed on Thursday. The metal is now trading below the 1,400 area at 1,395, 2.30% negative on the day. Watch out for the 200-day moving average at 1,370.

Platinum is falling for the fourth day in a row with the unit now testing the 840.00 area. Currently, XPT/USD is posting a 1.05% daily loss at 844.47.

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