Gold Weaker After Hitting Another 3.5-Month High Overnight; Weaker U.S. Jobs Data Limits Downside

February 8, 2016

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(Kitco News) – Gold prices are modestly lower in choppy, two-sided trading in the immediate aftermath of a U.S. jobs report that was on the weak side of expectations. Profit taking from recent good gains is featured in gold despite the somewhat downbeat U.S. jobs data. The precious metal did hit another 3.5-month high in overnight trading. April Comex gold was last down $5.70 at $1,151.80 an ounce. March Comex silver was last down $0.07 at $14.775 an ounce.

Friday morning’s U.S. employment report for January—arguably the most important U.S. data point of the month–showed the key non-farms payroll number up 151,000, following a strong rise of 292,000 in December. A reading of up 185,000 was expected. This report falls into the camp of the U.S. monetary policy doves who want the Federal Reserve to hold off on raising interest rates.

The U.S. dollar index saw a mild corrective bounce early Friday morning, after strong downside pressure this week that pushed prices to a four-month low. However, the index was losing altitude as of this writing and in the aftermath of the U.S. jobs report that was weaker than expected. The other key “outside market” finds Nymex crude oil futures prices trading near unchanged around the $31.75-a-barrel area.

A feature in the marketplace this week has been a shakeup in the currency markets. The U.S. dollar index has dropped sharply, the Euro currency has rallied sharply, while the Canadian and Australian dollars have also posted impressive gains. Given the already very mature bear market in the raw commodity sector, this week’s action in the FOREX markets is an early clue the raw commodity sector has, or is close to, bottoming out.

Other U.S. economic data due for release Friday includes the U.S. international trade report and consumer installment credit.

(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)

Wyckoff’s Daily Risk Rating: 2.5 (Trader and investor market risk aversion is not elevated so far today.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).

Technically, April gold futures prices are in a six-week-old uptrend on the daily bar chart and the bulls have gained the slight overall near-term technical advantage for the first time in months. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,180.00. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at this week’s low of $1,115.30. First resistance is seen at $1,160.00 and then at $1,170.00. First support is seen at $1,150.00 and then at $1,140.00. Wyckoff’s Market Rating: 6.0

March silver bulls have upside momentum and a three-week-old uptrend is in place on the daily bar chart. Prices Friday hit a three-month high. Silver bulls’ next upside price breakout objective is closing December futures prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.00. First resistance is at $15.00 and then at $15.25. Next support is seen at the overnight low of $14.815 and then at Thursday’s low of $14.65. Wyckoff’s Market Rating: 4.5.

By Jim Wyckoff, contributing to Kitco News;
Follow me on Twitter @jimwyckoff

Category: Gold