Gold Lower Following As-Expected U.S. Jobs Data

(Kitco News) - Gold prices are lower in early U.S. trading Friday and saw some added selling pressure from overnight losses in reaction to the just-released U.S. employment report that was in line with market expectations. June Comex gold was last down $14.30 at $1,221.00 an ounce. May Comex silver was last down $0.459 at $15.005 an ounce.

Traders and investors were anxiously awaiting Friday morning’s U.S. employment report for March from the Labor Department. This report is arguably the most important economic report of the month. The key non-farm payrolls number came in at up 215,000, which was in line with market expectations. Markets did not show a significant reaction to the report.

The U.S. dollar index recovered its overnight losses on the news, which also added some selling pressure to the precious metals markets. A feature in the marketplace this week had been the slumping U.S. dollar index, which dropped to a 5.5-month low on Thursday. The depreciating greenback is a bullish element for the raw commodity sector, as most major commodities are priced in U.S. dollars. That means those commodities are now less expensive to purchase in non-U.S. currency. Still, the raw commodity markets have not reacted much this week to the weaker dollar. In fact, many raw commodity markets have sold off, including sector leader crude oil. Nymex crude oil prices were weaker in early U.S. trading Friday, and trading below $38.00 a barrel.

Global stock markets were mostly weaker Friday, to start the second quarter of the year. The losses are blamed on a Bank of Japan report that showed Japanese business confidence has fallen to its lowest level in years. That report prompted a 3.6% drop in Japan’s Nikkei stock index. Other Asian markets also sold off, followed by weakness in European stock markets. U.S. stock indexes are also pointing toward narrowly mixed to slightly lower openings when the day session begins.

In other overnight news, the Markit purchasing managers’ index (PMI) for the Euro zone rose to 51.6 in March from 51.2 in February. However, the report showed manufactured goods prices falling at the steepest rate since 2009—suggesting the Euro zone still has a major problem in trying to control price deflation.

There is a slew of other U.S. economic data released Friday, including the U.S. manufacturing PMI, the global manufacturing PMI, the ISM manufacturing report on business, domestic auto industry sales, construction spending and the University of Michigan consumer sentiment survey.

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Wyckoff’s Daily Risk Rating: 3.0 (Trader and investor market risk aversion is just a bit 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, June gold futures bulls have the overall near-term technical advantage but trading has turned choppy. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,264.10. Bears' next near-term downside price breakout objective is closing prices below solid technical support at this week’s low of $1,207.70. First resistance is seen at the overnight high of $1,237.20 and then at this week’s high of $1,246.80. First support is seen at $1,217.00 and then at this week’s low of $1,207.70. Wyckoff’s Market Rating: 6.0

May silver bears have regained the overall near-term technical advantage following this morning’s sell off. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at this week’s high of $15.55 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.61. First resistance is at $15.20 and then at $15.55. Next support is seen at the overnight low of $14.95 and then at $14.75. Wyckoff's Market Rating: 4.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff