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Gold price sharply down following strong U.S. jobs data

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(Kitco News) - Gold and silver prices are solidly lower in early U.S. trading Friday, following a surprisingly strong U.S. jobs report. Gold notched a three-week low. April gold was last down $30.10 at $1,900.50 and March silver was down $0.59 at $23.03.

This morning’s January U.S. employment situation report from the Labor Department showed a sharp rise in non-farm payrolls of 517,000. The key number was expected to be up only 187,000 jobs, following a rise of 223,000 in the December report. The U.S. unemployment rate fell to 3.4%, compared to expectations for a rate of 3.6% and the December reading of 3.5%. Today’s strong jobs report appears to throw cold water on notions the Federal Reserve will back off on raising interest rates sooner rather than later, as was suggested by the results of this week’s FOMC meeting and Fed Chairman Powell’s press conference.

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on profit taking after recent strong gains that saw index prices hit multi-week highs on Thursday. The strong jobs report pushed the stock indexes even lower.

In overnight news, the Euro zone January producer price index was reported up 24.6%, year-on-year, but excluding energy was up 12.3%.

Gold has no reason to fear the Fed, so investors shouldn't be betting against it - SSGA's George Milling-Stanley

The key outside markets today see the U.S. dollar index surging higher in the wake of the jobs report. Prices Thursday hit a nine-month low. Nymex crude oil futures prices are near steady and trading around $75.75 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.48%--up following the strong jobs report.   

Other U.S. economic data due for release Friday includes the U.S. services purchasing managers’ index (PMI), the global services PMI and the ISM report on business services.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls still have the overall near-term technical advantage but are now fading. A three-month-old uptrend on the daily bar chart has at least temporarily been negated. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at this week’s high of $1,975.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,925.00 and then at today’s high of $1,932.40. First support is seen at $1,885.00 and then at $1,875.00. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at the January high of $24.775. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at today’s high of $23.665 and then at $24.00. Next support is seen at the January low of $22.845 and then at $22.50. Wyckoff's Market Rating: 6.5.

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