Make Kitco Your Homepage

Price gains for gold, silver after tame U.S. jobs data

Kitco News

(Kitco News) - Gold and silver prices are higher and hit daily highs in early U.S. trading Friday, on the heels of a major U.S. monthly economic report that landed in the camp of the U.S. monetary policy doves. Gold prices notched a three-week high. December gold was last up $13.60 at $1,980.00 and December silver was up $0.398 at $25.215.

(Note: For exclusive market forecasts and intermarket insights, sign up to my new weekly Markets Front Burner newsletter )

A busy U.S. data week is highlighted by Friday morning’s employment situation report for August from the Labor Department, which showed the key non-farm payrolls number up 187,000, which is slightly above the consensus forecast of up 170,000 and compares to a downwardly revised rise of 157,000 in the July report and a revised gain of 105,000 in the June report. The U.S. unemployment rate in August rose to 3.8% compared to a rate of 3.5% in the July report. Mostly downbeat U.S. data released earlier this week had many thinking today’s jobs report would be in line with market expectations, or a bit weaker. Still, the downward non-farm jobs revisions in the July report and the tepid gains in the June report push the overall internals of the August jobs report slightly into the dovish camp on U.S. monetary policy. That’s bullish for the metals markets, suggesting no further interest rate hikes from the Federal Reserve would be better for consumer and commercial demand for the metals.

Asian stock markets were mixed and European stock markets mostly up in overnight trading. U.S. stock indexes are pointed to higher openings when the New York day session begins. The U.S. stock indexes have posted good rebounds recently. However, veteran market watchers know history shows the months of September and October can be turbulent ones for the stock and financial markets.

In overnight news, China got some upbeat economic data, as its Caixin manufacturing purchasing managers index (PMI) that came in stronger than expected at 51.0 in August versus 49.2 in July. A reading above 50.0 suggests growth in the sector.  China’s central bank announced it is cutting foreign exchange reserve requirements for local banks in an effort to support the depreciating Chinese yuan that has lost more than 5% against the U.S. dollar. FOREX reserve requirements for banks will be lowered to 4% from 6% in order to improve the capacity of Chinese financial institutions to use foreign exchange funds.

Singapore, Qatar continue buying gold, Libya boosts reserves to record levels

Meantime, the Euro zone reported its August manufacturing PMI was 43.5 versus expectations for a reading of 43.7, and compares with the July reading of 42.7.

The key outside markets today see the U.S. dollar index lower following the jobs report. Nymex crude oil futures prices are higher and trading around $84.50 a barrel. The benchmark U.S. Treasury 10-year note yield down-ticked a bit after the jobs data and is presently fetching around 4.069%.

Other U.S. economic data due for release Friday includes the U.S. manufacturing PMI, the ISM report on business manufacturing, the global manufacturing PMI, domestic auto industry sales and construction spending.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bears still have the overall near-term technical advantage but the bulls have gained momentum this week. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at $1,985.00 and then at $2,000.00. First support is seen at today’s low of $1,964.60 and then at $1,950.00. Wyckoff's Market Rating: 4.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the overall near-term technical advantage and have momentum. A fledgling price uptrend is in place on the daily chart. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at the July high of $25.82. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at this week’s high of $25.425 and then at the July high of $25.82. Next support is seen at $24.745 and then at $24.555. Wyckoff's Market Rating: 6.5.

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.