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Gold Prices Higher Despite Strong U.S. Jobs Data

Kitco News

(Kitco News) - Gold prices are trading modestly higher in early-morning U.S. trading Friday, following a U.S. economic report that was much stronger than expected. Gold’s resilience in the face of the strong jobs report suggests recent selling pressure has at least temporarily exhausted the bears, and the yellow metal is due for at least a respite from downside pressure. June gold futures were last up $2.20 an ounce at $1,274.30. July Comex silver was last up $0.068 at $14.685 an ounce.

This morning’s just-released April U.S. employment report from the Labor Department showed a rise of  263,000. The number was forecast at up 190,000. However, Wednesday’s very strong ADP jobs gain (up 275,000 versus expectations of up 177,000) had many thinking today’s more important Labor Department jobs number would indeed be higher. The internals of the jobs report were also very upbeat, including upward revisions to the March non-payrolls number. This report falls into the camp of the U.S. monetary policy hawks, who do not want to see the Federal Reserve cut interest rates anytime soon, and would like to see a rate hike.

Asian stock markets were mixed to flat overnight, while European stocks were mostly firmer. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. “Sell in May and go away.” U.S. stock indexes have sold off the first two days in May. That old saying suggests selling stocks in May and not coming back to the buy side until late summer. Such a scenario would be a bullish element for competing classes like raw commodities.

In other overnight news, the Eurozone’s April consumer price index was reported up 1.7%, year-on-year, from a reading of up 1.4% in March. Meantime, the March producer price index was up 2.9%, year-on-year, in the Euro zone. The European Central Bank has targeted a rate of around 2% for annual Euro zone inflation.

The World Gold Council is forecasting that world central banks will buy 500 to 600 tons of gold this year, compared to around 400 tons in recent years. However, in 2018 global central banks bought 652 tons. It’s interesting and somewhat ironic that supposedly smart world central bankers continue to buy gold as a store of value, while many supposedly smart financial advisors tell individual investors to shy away from an asset that produces no yield or dividend. It can be argued that owning gold is like having a weapon for personal protection: you don’t need it until you really need it.

The key “outside markets” today see the U.S. dollar index modestly higher. Meantime, Nymex crude oil prices are near steady and trading just below $62.00 a barrel.

Other U.S. economic data due for release Friday includes the advance economic indicators report, the U.S. services PMI, and the ISM non-manufacturing report on business.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bears have the overall near-term technical advantage. A nine-week-old downtrend line is in still place on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,250.00. First resistance is seen at Thursday’s high of $1,279.40 and then at last week’s high of $1,290.90. First support is seen at this week’s low of $1,267.30 and then at $1,260.00. Wyckoff's Market Rating: 3.5.

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bears have the overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $15.15 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.50. First resistance is seen at $14.775 and then at $15.00. Next support is seen at this week’s low of $14.57 and then at $14.50. Wyckoff's Market Rating: 3.0.

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.