Gold prices tested their lowest levels in the last seven months with the huge employment increase in the USA. Additionally, sales continued in the gold markets throughout the week. However, signs of stabilization emerged late in the trading week.
Critical data exceeded expectations, pressure on gold prices increased!
U.S. nonfarm payrolls increased by 336,000 in September, according to the Bureau of Labor Statistics. Thus, the monthly figure significantly exceeded consensus estimates of 171,000. The bureau also revised upward the employment figures for August and July. August employment growth was revised down to 227,000 from the initial estimate of 187,000. July figures were revised from the previous estimate of 157,000 to 236,000.
Continued strength in the U.S. labor market remains the biggest factor supporting the Fed’s stance of keeping interest rates in restrictive territory for the foreseeable future. This raises bond yields and puts pressure on gold prices. Gold contracts for December delivery were traded at $1,825 per ounce, down 0.37% on the day. Forexlive.com’s chief currency strategist Adam Button interprets the latest data as follows:
The yield on treasury bonds can reach 5%. In contrast, the long-term bullishness does most of the Fed’s work. This means they probably won’t have to raise it. But this also means that the economy – especially autos and housing – is particularly vulnerable to a slowdown next year.
“ We think the Fed has completed its interest rate hike!”
cryptokoin.com As we reported, the headline employment figure came in much higher than expected. However, the report also noted increasing weakness in the labor market. The report stated that the unemployment rate remained unchanged at 3.8%, slightly below expectations. Meanwhile, eEconomists expected the unemployment rate to fall to 3.7%. The US labor market continues to show strong growth. However, some analysts say this will not force the Fed to maintain its aggressive monetary policy stance. They state that this may provide some relief for gold prices. In this context, Capital Economics’ North America chief economist Paul Ashworth makes the following assessment:
Overall, the report shows that the labor market is experiencing a soft landing. If payrolls continue to grow at a high rate, the Fed may be tempted to raise rates further. However, as wage growth and price inflation decline rapidly and the rise in long-term yields triggers a significant tightening in financial conditions, we think the Fed has completed its rate hike.
Weekly gold prices technical analysis: Bounce selling opportunity!
Technical analyst Christopher Lewis, depicts the technical view of gold as follows. Gold markets It has been the subject of a pretty hard sell over the last few weeks. Additionally, yield increases continue in bond markets. This seems to be a pattern right now. So it’s definitely toxic to gold. Meanwhile, Friday’s Nonfarm Payrolls numbers were three times as high as expected. This will continue to increase the pressure on gold. However, it is worth noting that I think the market is oversold and the bounce is coming. This bounce is something you need to be aware of and recognize that it could be a selling opportunity.
It’s not that I don’t like gold long term, I just think we need to see clarity in the bond market for that to happen. At this point we are light years away from that happening for gold prices. So I think we’re facing a situation where we need to be aware that markets bounce from time to time and that can provide an opportunity. Admittedly, the real fight is probably closer to the $1,800 level. I’ll be watching this very closely.
The $1,800 level isn’t just a big, round, psychologically important number. It is also where the 200-Week EMA is rapidly approaching. A drop below this level will likely cause the market to decline. However, I think we have a rally that will likely sell in the short term. So you will need to pay close attention to this. It is easier to trade this on a daily time frame. However, the analysis will still remain the same. The $1,900 level above remains an important resistance barrier.
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