Gold prices experienced a modest decline in the aftermath of the U.S. employment report for September, which revealed much stronger-than-expected non-farm payroll job gains. This robust jobs data suggests that the Federal Reserve is likely to maintain its hawkish stance on U.S. monetary policy. December gold futures touched a 10-month low and were last down $5.40 at $1,825.90, while December silver edged up $0.006 to $21.00.
The Labor Department’s September U.S. employment situation report showed a non-farm payroll increase of 336,000, significantly surpassing expectations of a rise of 170,000. This figure is a notable uptick from August’s report, which indicated a gain of 187,000 non-farm jobs. However, some components of the jobs report displayed relative weakness, such as the overall unemployment rate remaining at 3.8%, in contrast to the anticipated 3.7% reading.
The surprisingly strong jobs report defied earlier expectations, with some analysts having anticipated a downside miss similar to the recent ADP jobs report. This reinforces the emerging narrative in the marketplace that the Federal Reserve intends to pursue a policy of “much higher for much longer” interest rates.
Overnight, Asian and European stocks exhibited mixed but mostly higher performance. In contrast, U.S. stock indexes are expected to open lower following the release of the robust jobs report. However, U.S. stock indexes displayed strength overnight.
Regarding other key markets, the U.S. dollar index advanced solidly after the jobs report, having been slightly lower earlier in the night. Nymex crude oil prices experienced weakness and are trading around $81.50 per barrel, despite briefly reaching above $95.00 per barrel just last week. The benchmark U.S. Treasury 10-year note yield stands at 4.84% and has risen further following the release of the jobs report.
Additional U.S. economic data scheduled for release on Friday includes the consumer credit report.
From a technical perspective, the bears in the gold futures market maintain a strong near-term technical advantage. Gold prices have been in an accelerating four-month-long downtrend on the daily bar chart. To regain control, the bulls must achieve a close in December futures above substantial resistance at $1,900.00. Conversely, the bears’ next near-term downside price objective is to drive futures prices below solid technical support at $1,800.00. Initial resistance is observed at the overnight high of $1,848.80, followed by $1,850.00. Initial support is identified at $1,815.00, with more substantial support at $1,800.00. Wyckoff’s Market Rating for gold: 1.0.
As for silver, the bears currently maintain a solid overall near-term technical advantage. Silver prices are in a descending trend on the daily bar chart. To alter this trend, silver bulls must accomplish a close in December futures above robust technical resistance at $23.00. On the downside, the bears’ next target is to close prices below substantial support at $20.00. Immediate resistance is seen at Tuesday’s high of $21.595 and then at $22.00. Nearby support levels include this week’s low of $20.85 and $20.50. Wyckoff’s Market Rating for silver: 2.0.
