Gold Heads To 1,280 After NonFarm Payrolls

After a brief pullback, Gold is losing ground following a mixed employment report in the United States. DXY reacted positively as the market saw Nonfarm payrolls numbers as a positive signal that the US economy is in good shape.

Nonfarm payrolls data fuels market sentiment

The United States employment report showed that 196K new jobs were created in March, better than the 180K nonfarm payrolls expected by the market. February was revised 13K up to 33K.

The unemployment rate remains at 3.8%, but the participation rate declined to 63.0% from 63.2%, even though expectations were for a more significant decline to 62.9%.

Wages disappointed with a 3.2% monthly increase only, below the 3.4% expected by the market and performed previous month.

Watch the long term picture

The Payroll number of 196K new jobs in March cuts down concerns that the labor market in the US might be weakening following February’s 20K reading and March ADP data of 129K.

Wage growth was disappointing, but it will have a minimal impact on the long term market sentiment as overall job creation remains strong and the lack of labor supply will push wages higher in the long term. Finally, annual wage increases stay in a positive trend.

In this framework, equities remain strong, and the dollar index is adding gains with the gold becoming under pressure. XAU/USD is approaching to recent lows.

Dollar index positive after US employment report

After a brief shakeup, dollar is trading positive on the day as investors are welcoming nonfarm payrolls data.

DXY is currently trading at 97.32, 0.02% positive on the day after a brief peak to intra-day highs at 97.40.

Gold down, but a break below 1,280 looks unlikely

Gold is trading negative on Friday following the nonfarm payrolls, but it remains inside the recent range between 1,285 and 1,295.

Currently, XAU/USD is pricing at 1,290, 0.15% negative on the day. The pair is under pressure following the employment data, but the movement doesn’t seem too violent to be the catalyst that will drive the metal below its critical 1,280 support.

Gold is ready to close its second negative week in a row, but as mentioned above, 1,280 seems strong enough.

As James Hyerczyk, FX Empire analyst said in a recent article, “gold futures are being pressured by a stronger U.S. Dollar, rising interest rates and increasing appetite for higher risk assets.”

Silver up on the day, ready to close positive on the week

Silver is trading positive on Friday after a brief pullback on the US nonfarm payrolls data. The metal is extending its bounce from 14.90 performed on Thursday.

XAG/USD is currently trading at 15.18, 0.22% positive on the day. Silver is now testing the 15.20 significant resistance that has limited gains in the last five sessions.

The metal is poised to close positive on the week after the significant loss performed the last period. However, the commodity looks vulnerable in the bigger picture.