Update: Gold price rebounds after stronger-U.S.-jobs-report sell off

(Kitco, Fri. Jan 5th, 2024) – Gold prices are firmer on a good rebound after trading solidly down and hitting a three-week low in earlier U.S. trading Friday, following a U.S. employment situation report that showed stronger jobs growth than expected. Silver prices are modestly up. February gold was last up $3.30 at $2,053.60. March silver was last up $0.113 at $23.30.

Friday morning’s U.S. employment situation report for December showed the key non-farm jobs number in the report up 216,000 versus expectations for a rise of 170,000 and compares to a revised rise of 173,000 seen in the November report. The U.S. unemployment rate in December was 3.7% versus the consensus forecast of 3.8% and a reading of 3.7% in the November report. The report falls into the camp of the U.S. monetary policy hawks, who want to see the Federal Reserve keep its money policy tighter in 2024. The U.S. dollar index was solidly higher just after the jobs data but has since backed well down from its daily high. U.S. Treasury yields up-ticked after the jobs report but have since backed down from their daily highs. The benchmark U.S. Treasury 10-year note yield is back above 4% for the first time in almost a month. That suggests the marketplace has backed off a bit on its dovish expectations for U.S. interest rate cuts in the coming months.

Gold’s rebound from solid losses posted in the immediate aftermath of the report came as the USDX has lost most of its daily gains and amid the downtick in bond yields from their daily highs. Rallying crude oil prices also are a bullish “outside market” element for the metals markets. Bullish overall technicals continue to invite the speculative chart-based traders to the long side of the yellow metal.

Asian and European stock markets were mixed to weaker overnight. U.S. stock index futures are set to open lower when the New York day session begins. Risk appetite in the marketplace is not robust this first week of 2024, amid heightened tensions in the Middle East. A Wall Street Journal headline today reads: “Stock forecasters are on edge over weak start.”

In overnight news, the Eurozone consumer price index in December came in at up 2.9%, year-on-year, versus up 2.4% in the November report. Eurozone producer prices in November were reported down 8.8% year-on-year.

The key outside markets today see the U.S. dollar index slightly higher after this week’s strong rebound. Nymex crude oil prices are solidly higher and trading around $74.00 a barrel. Prices are still in a downtrend on the daily bar chart. Meantime, the yield on the benchmark U.S. Treasury 10-year note is presently fetching 4.078%.

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

Technically, the gold futures bulls still have the overall near-term technical advantage but are fading a bit. Prices are still in a three-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at Thursday’s high of $2,058.10 and then at Wednesday’s high of $2,074.30. First support is seen at the overnight low of $2,030.80 and then at $2,025.00.

The silver bears have the overall near-term technical advantage. A choppy, three-month-old uptrend on the daily bar chart has been negated. 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 the November low of $22.26. First resistance is seen at the overnight high of $23.38 and then at $23.75. Next support is seen at $23.00 and then at this week’s low of $22.88.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com