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The jobs report outdoes estimates sparking a rally in the precious metals

Commentaries & Views

Yesterday’s strong price decline in gold could easily be a “one and done” price dip based on today’s strong gains following the release of the jobs report for December. The report revealed that the labor market finished 2022 on a strong note with December adding 223,000 new jobs. This was well above estimates which anticipated an additional 200,000 jobs were added last month.

Additionally, a report today by the Institute for Supply Management revealed its non-manufacturing PMI decreased from 56.5 in November to 49.6 last month. This was the first contraction month over month in more than 2 ½ years. Collectively these two reports could have a strong impact on the monetary policy of the Federal Reserve because they might lower the probability of a recession.

The report fueled strong rallies across the board in U.S. equities. The Dow gained 2.13%, the NASDAQ composite gained 2.56%, and the S&P 500 increased by 2.28%.

The entire precious metals complex closed sharply higher with palladium gaining 4.06%, and platinum gaining 3.29%. As of 4:20 PM EST gold futures basis the most active February contract is currently fixed at $1871.1 after factoring in today’s price advance of $30.50, or 1.66%. Silver futures gained 2.35% or $0.55 with the most active March contract now fixed at $23.97.

The vast majority (over 60%) of gold’s price gains today were directly attributable to dollar weakness. The U.S. dollar index lost 1.11% in value and is now fixed at 103.66. Gold’s gains of 1.65% were a combination of bullish sentiment by traders (one-third) and dollar weakness (two-thirds) making up today’s price increase in gold.

Support and resistance levels in gold

The chart above is a daily Japanese candlestick chart of gold futures. Our technical studies indicate that current resistance occurs first at $1883. This is based on a recent top that occurred in the middle of June 2022. Above that, there is major resistance at $1910 based on a top achieved last May.

The recent tops that occur at $1824 (August 2022) and $1791 (November 2022) continue to be technical levels of support.

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Wishing you as always good trading,

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.