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Gold, silver see initial weakness on U.S. jobs data, but then rebound

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(Kitco News) - Gold and silver prices are modestly higher in early U.S. trading, after seeing some weakness following the U.S. jobs report for July. Both metals hit new for-the-move highs overnight. Gold hit a record high of $2,078.00, basis October Comex futures, while silver notched a more-than-seven-year high of $29.915, basis September Comex futures. Some mild profit taking from the futures traders and a somewhat upbeat U.S. jobs report pulled the metals down from their overnight highs. October gold futures were last up $1.10 an ounce at $2,059.50. September Comex silver prices were last up $0.25 at $28.63 an ounce.

The just-released U.S. jobs report for July from the Labor Department showed the non-farm payrolls number rising 1.8 million, which was above the estimates for a rise of around 1.48 million. Payrolls rose 4.8 million in June. The July unemployment rate was 10.2% versus expectations of a 10.6% rate and compares to a jobless rate of 11.1% in June.

Importantly, while there are no early chart clues to suggest the gold and silver markets are close to major tops, both are now getting short-term overbought, technically, and are due for downside corrections in the uptrends. And remember that with the higher volatility and bigger daily price gains seen at present, there will also be bigger downside corrections when they come.

Global stock markets were weaker in overnight trading. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. Traders and investors are more downbeat on this last trading day of the week. President Trump has just ordered a ban on U.S. consumer dealings with the Chinese owners of the consumer apps TikTok and WeChat. The order is the administration’s latest salvo aimed at China, following a trade war and targeted actions against other Chinese companies. The new executive orders take effect in 45 days. The marketplace wonders what comes next in the heated rivalry between the two largest economies in the world, and two of the largest militaries.

Meantime, negotiations between U.S. Democrats and Republicans in the Congress on a new stimulus package for Americans have broken down, with President Trump threatening to take unilateral action on the matter.

In other overnight news, China’s exports rebounded strongly in July—up 7.2%, year-on-year. Its imports dropped 1.4% in the period. China’s overseas shipments to the U.S. in July rose 12.5%, year-on-year, marking the strongest increase since 2018. Some attribute the jump in U.S. exports to front-loading as relations between two nations deteriorate.

The European Union got some upbeat news Friday when German industrial production came in better than expected in June—up 8.9% from May.

The important outside markets today see Nymex crude oil prices slightly weaker and trading around $41.85 a barrel. The U.S. dollar index is higher on a corrective bounce after hitting a two-year low Thursday. The yield on the benchmark 10-year U.S. Treasury note is presently around 0.53% and near a record low.

Other U.S. economic data due for release Friday includes monthly wholesale trade and consumer credit.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in October 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 the overnight high of $2,078.00 and then at $2,100.00. First support is seen at the overnight low of $2,041.20 and then at $2,015.50. Wyckoff's Market Rating: 9.5

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bulls have the strong overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $30.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $25.00. First resistance is seen at $29.00 and then at the overnight high of $29.915. Next support is seen at the overnight low of $27.67 and then at $27.00. Wyckoff's Market Rating: 9.0.

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.