(Kitco News) - Gold prices are modestly higher and silver modestly down in early U.S. trading Friday, in the wake of a much-stronger-than-expected key U.S. economic report that fell squarely into the camp of the U.S. monetary policy hawks. February gold hit a four-week high overnight and was last up $4.30 at $2,694.50 and March silver also notched a four-week high overnight and was down $0.135 at $30.88.
The U.S. data point of the week saw the employment situation report for December and its key non-payrolls increasing by 256,000, which is way above the 160,000 rise expected by the marketplace. The unemployment rate edged down to 4.1% from the 4.2% that was expected. The Wall Street Journal said “the results were the latest sign that the U.S. labor market has recovered from its mid-year stumble and may even be gaining steam.” The marketplace was already reckoning the Federal Reserve will be hard-pressed to continue to lower U.S. interest rates this year.
Asian and European stock indexes were mixed to lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins and sold off after the jobs report. The yield on the 10-year Treasury note spiked to near 5.0% right after the jobs report, but has backed down to around 4.8%. “This is creating a bit of a headwind for U.S. equities and this will increase should yields rise further,” said David Morrison of Trade Nation. “The next big hurdle, or target, for the 10-year is 5.0%. If it were to break above that and hold, then it’s likely that there would be a significant shift out of U.S. equities, particularly anything viewed as excessively overvalued (all the big techy, growth stocks) and a move back into the relative safety of fixed income, given the near-guaranteed 5% annual return on it,” said Morrison.
In overnight news, China’s central bank suspended purchases of Chinese government bonds in the open market, citing excess demand from the public. The move is also an attempt to support the beleaguered Chinese yuan in the foreign exchange market amid a listing Chinese economy.
The key outside markets today see the U.S. dollar index solidly up in the wake of the strong jobs report. Nymex crude oil futures prices are sharply up, at a 5.5-month high, and trading around $77.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.8%.
Other U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey.
Technically, February gold futures bulls have the overall near-term technical advantage and have momentum. Bulls’ next upside price objective is to produce a close above solid resistance at the December high of $2,761.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the December low of $2,596.70. First resistance is seen at today’s high of $2,711.40 and then at $2,718.00. First support is seen at the overnight low of $2,686.90 and then at Thursday’s low of $2,673.70. Wyckoff's Market Rating: 6.5.
March silver futures bears have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $32.00. The next downside price objective for the bears is closing prices below solid support at the December low of $29.145. First resistance is seen at $31.50 and then at $32.00. Next support is seen at $30.50 and then at $30.00. Wyckoff's Market Rating: 4.5.
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