(Kitco News) - Gold and silver prices are sharply higher in early U.S. trading Friday, following another downbeat U.S. economic report that falls squarely in the camp of the U.S. monetary policy doves, who want the Federal Reserve to lower interest rates sooner rather than later. The marketplace just now is factoring in a better-than-70% chance for a 50 basis-point cut by the Fed at the September FOMC meeting. December gold was last up $34.40 at $2,514.70, at a two-week high and not far below the contract and record high. September silver was up $0.668 at $29.155.
The just-released U.S. monthly jobs report for July from the Labor Department showed the key non-farm payrolls numbers up 114,000 versus expectations for rise of 185,000 in compares to the downwardly revised June gain in non-farm jobs of 179,000.
David Morrison of Trade Nation wrote in a Friday morning email dispatch, before the release of the U.S. jobs report: “The suggestion is that the Fed may now be behind the curve when it comes to loosening monetary policy. September appears to be the first opportunity for a rate cut. But recent data releases, including yesterday’s ISM manufacturing PMI and weekly unemployment claims, suggest an economy that may be cooling quite rapidly. If that’s the case, then the Fed may be forced to cut more aggressively than they’ve been indicating, not because they’re getting closer to their 2% inflation target, but due to recession fears.” His comments seem even more spot on after the release of the weaker U.S. jobs report.
Gold is also seeing safe-haven demand amid heightened Middle East tensions. Iran has vowed to attack Israel after a top Hamas official was killed on Iranian soil. Gold has also benefited from a dovish lean by the Federal Reserve this week. The World Gold Council reported central bank gold holdings continue to rise, up 6%, year-on-year, in the second quarter.
Asian and European stock indexes were solidly lower overnight, following Wall Street’s sell off Thursday. Japan’s Nikkei index had its worst day since the pandemic in 2020. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. A weak U.S. manufacturing purchasing managers index for July, released Thursday morning, has also spooked the stock market bulls.
The key outside markets today see the U.S. dollar index sharply lower and hitting a seven-week low. Nymex crude oil prices are solidly lower after the jobs report and hit a two-month low, trading around $75.00 a barrel. The benchmark 10-year U.S. Treasury note yield is falling and is presently fetching 3.827%.
Other U.S. economic reports out Friday include manufacturers’ shipments and inventories.
Technically, December gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,537.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,400.00. First resistance is seen at 2,537.70 and then at $2,550.00. First support is seen at the overnight low of $2,479.50 and then at $2,465.00. Wyckoff's Market Rating: 8.5.
September silver futures bears have the slight overall near-term technical advantage. Prices are still in a downtrend on the daily bar chart, but just barely now. Silver bulls' next upside price objective is closing prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at the July low of $27.45. First resistance is seen at $29.50 and then at $29.63. Next support is seen at the overnight low of $28.275 and then at $28.00. Wyckoff's Market Rating: 4.5.
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