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Solid price pressure on gold, silver after stronger U.S. jobs report

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(Kitco News) - Gold and silver prices are solidly lower in early U.S. trading Friday, in the immediate aftermath of a stronger-than-expected U.S. jobs report that also had some higher inflation implications. Overnight, gold hit a 3.5-month high and silver a six-month high. February gold was last down $21.70 at $1,794.30 and March silver was down $0.30 at $22.51.

This morning's highly anticipated U.S. employment situation report for November showed the key non-farm payrolls figure up 263,000, which is above the forecast rise of 200,000 and compares to a revised gain of 284,000 seen in the October report. Importantly, the average hourly earnings showed a rise of 0.55% from October and up 5.09%, year-on-year. Those figures were deemed hot by the marketplace. Taken altogether, this report is deemed too strong for the Federal Reserve's liking and suggests the U.S. central bank will be reluctant to back off too much on its heretofore aggressive monetary policy tightening. "This is a bad report for the Federal Reserve," said CNBC economics reporter Steve Liesman.

Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.

Traders continue to monitor the civil unrest in China. The protests are not spiraling out of control, but neither are they going completely away. Reports said China is now clamping down on internet access. Reports also say China is relaxing some its Covid lockdowns (likely due to the public protests), while at the same time China says new Covid infections are declining and vaccinations are on the rise. This has at least temporarily assuaged the marketplace regarding this situation.

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In the wake of the strong jobs data, the key outside markets today see the U.S. dollar index solidly higher after hitting a 3.5-month low overnight. Nymex crude oil prices are near steady and trading around $81.00 a barrel. There have been some reports this week that OPEC at its meeting this weekend will consider cutting its collective crude oil production. However, other reports say the cartel will leave its production unchanged. It appears the European Union will set a price cap of $60 a barrel on Russian crude oil imports. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.634%--up significantly after the jobs report.

In overnight news, the Euro zone producer price index for October fell 2.9% from September but was up 30.8%, year-on-year. Those numbers were slightly less than expected.

There is no other major U.S. economic data due for release Friday.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls have the firm overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Bulls' next upside price objective is to produce a close in February futures above solid resistance at the August high of $1,836.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at the overnight high of $1,818.70 and then at $1,825.00. First support is seen at Thursday's low of $1,782.90 and then at $1,770.00. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the firm overall near-term technical advantage. A choppy, three-month-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at today's high of $23.145 and then at $23.50. Next support is seen at Thursday's low of $22.24 and then at $22.00. Wyckoff's Market Rating: 7.0.

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.