Gold price up after mildly upbeat U.S. jobs data

(Kitco News, Fri. Jan. 6th, 2023) – Gold and silver prices are posting good gains in early U.S. trading Friday, in the wake of some important U.S. employment data that was upbeat, but yet not too strong. February gold was last up $14.60 at $1,855.10 and March silver was up $0.451 at $23.88.

What is arguably the most important U.S. data point of the month saw this morning’s employment situation report for December from the Labor Department post a non-farm payrolls gain of 223,000. The marketplace expected a gain of 200,000, following a rise of 263,000 in the November report.

Gold and the general marketplace appear to be breathing a sigh of relief (relief rallies) that the Labor Department’s jobs report was not stronger than expected, which may have prompted the Federal Reserve to become even more aggressive on its monetary-policy-tightening mission. On Thursday, the U.S. ADP national employment report came in at up 235,000 jobs in December, compared to the consensus forecast of up 153,000. The stronger ADP report had some market watchers indeed suspecting today’s non-farm jobs number might be stronger, too.

Analyst Craig Erlam of OANDA said earlier today, before the jobs report’s release, in an email dispatch: “The November (U.S. jobs) report contained everything the Federal Reserve did not want to see: strong jobs growth, with upward revisions to prior releases, much higher wages than anticipated and weaker participation. If that’s a blip in the trend, it’s no big deal. But a second consecutive month would deliver a sledgehammer to hopes of a lower terminal rate. The Fed has remained extremely hawkish throughout all of this, through fear of feeding investors’ craving for a dovish pivot and unintentionally easing financial conditions. But another strong jobs report today would further justify such a hawkish approach and perhaps send risk assets into a bit of a tailspin as the prospect of a higher terminal rate increases alongside recession risks.” Most traders and investors indeed breathed a sigh of relief following today’s report that was almost Goldilocks-like: not too hot and not too cold.

How soon will the Fed cut rates after hiking by 425 bps this year?

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trading activity was subdued overnight.

In overnight news, the Euro zone December consumer price index rose 9.2%, year-on-year, compared to a rise of 10.1% in November, and was a bit lower than the consensus forecast of up 9.7%. The core CPI (minus food and energy) came in up 5.2% in December.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil futures prices are near steady and trading around $73.75 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching around 3.75%.

Other U.S. economic data due for release Friday includes the ISM report on business services, and manufacturers’ shipments and inventories.

Technically, the gold futures bulls have the solid overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,900.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at today’s high of $1,853.50 and then at this week’s high of $1,871.30. First support is seen at today’s low of $1,835.20 and then at this week’s low of $1,829.90.

The silver bulls have the overall near-term technical advantage but are fading a bit this week. A choppy, four-month-old uptrend is still in place on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $24.00 and then at $24.50. Next support is seen at this week’s low of $23.26 and then at $23.00.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com