By: Jim Wyckoff
September 6, 2013
Gold prices are higher in early U.S. trading Friday, rallying from weaker levels seen overnight and following a U.S. employment report that did not meet expectations. The pop in gold prices was accentuated as many market watchers were leaning to the side of an upside surprise in U.S. jobs growth during August. December Comex gold was last up $12.40 at $1,385.40 an ounce. Spot gold was last quoted up $18.00 at $1386.25. December Comex silver last traded up $0.53 at $23.785 an ounce.
The Labor Department reported the U.S. economy added 169,000 jobs in August, which did not meet market expectations of around a 175,000 rise. There were also significant downward revisions in non-farm payrolls growth in June and July. The overall unemployment rate fell to 7.3% in August, the lowest since December 2008, and a bit lower than forecasts it would remain steady at 7.4%. Given upbeat U.S. economic data released this week, the market place was expecting even a bit better jobs growth than the median forecast.
Many market watchers believed Friday’s jobs data would tip the Federal Reserve’s hand on when the “tapering” of U.S. monetary policy will begin. The slightly weaker-than-expected jobs data really did not tip the scales in either direction of the Fed reducing its monthly bond buying sooner or later. So now it’s on to the next batch of economic data out next week.
An important element in the market place mix is rising world interest rates. The 10-year U.S. Treasury note is flirting with a 3% yield. If the note yield pushes above 3%, many market watchers believe that will be a game-changer for many big money managers—mostly bearish for the world stock markets. If that is the case, it could wind up being bullish for the precious metals and raw commodity sector, due to the fact that money flowing out of equities will seek other asset classes.
The market place is still concerned regarding the U.S. threat to attack Syria after the Assad regime allegedly used chemical weapons against Syrian citizens. However, economic data this week has been the keener focus of the market place, for now. The U.S. Congress is mostly backing President Obama on his notion to use U.S. firepower to strike Syria. However, at the G-20 meeting in St. Petersburg, Russia, it appears Russian President Putin is trying to steal the show by him and his Asian allies squaring off against President Obama on his intention to attack Syria. Putin, who is striving to be relevant on the world stage, has hinted Russia could come to the aid of Syria if the U.S. military did attack the Bashar Assad regime. Come Monday morning the Syria tensions could well be right back on the front burner of the market place, including some new twists that come out of the G-20 meeting. Gold also could be getting a boost Friday morning after the U.S. State Department issued embassy and travel warnings for Lebanon and Turkey, due to potential terrorist threats against U.S. interests there.
The London A.M. gold fix is $1,368.25 versus the previous P.M. fixing of $1,385.00.
Technically, December gold futures bulls have the overall near-term technical advantage. A two-month-old uptrend is still in place on the daily bar chart. However, the bulls need to show more power soon to keep the price uptrend in place. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the August high of $1,434.00. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at $1,350.00. First resistance is seen at $1,400.00 and then at this week’s high of $1,416.40. First support is seen at $1,375.00 and then at the overnight low of $1,358.80.
December silver futures bulls still have the overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart, but just barely. Bulls need to show more power soon to keep the uptrend in place. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the August high of $25.16 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $23.00. First resistance is seen at $24.00 and then at this week’s high of $24.53. Next support is seen at $24.50 and then at this week’s low of $23.04.
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