Jobs reports come in well below forecasts and support gold prices

Job growth was moderate at best last December, according to the U.S. Labor Department’s nonfarm payroll jobs report which was released today. Economists polled by various news sources predicted that there would be an additional 400,000 jobs added to payrolls last month. The actual number was roughly half of the projected forecast revealing that only 199,000 additional jobs were added.

MarketWatch reported that “The U.S. created a lackluster 199,000 new jobs in December, signaling that persistent labor shortages and another major coronavirus outbreak are holding back the economy. The increase in employment was well below Wall Street’s expectations. Economists polled by The Wall Street Journal had forecast 422,000 new jobs. The U.S. jobless rate, meanwhile, slipped to 3.9% from 4.2% and drifted to a new pandemic low. The rate stood at 3.5% right before the pandemic.”

The United States continues to see the number of daily infections of Covid-19 grow exponentially. The new variant “Omicron” has raised the daily infections in the United States to  1 million daily cases on Monday. This new surge of infections is a major component that continues to create job shortages. It clearly illustrates that the high level of infections is still a major force that is disrupting new job creations which are stifling the economic recovery in the United States.

The current economic undertones continue to keep inflationary pressures high. Speaking with MarketWatch Jeff Wright, chief investment officer at Wolfpack Capital said, “The headline number was a “big miss. The biggest concern for me is wage inflation. Looking at the sum of parts, if the Federal Reserve is most concerned about inflation, then this report is problematic. If the Fed is valuing higher levels of employment and getting labor participation rates back above 62.5%, then the report isn’t.”

As of 5:00 PM EST gold futures basis, the most active February 2022 contract is up $7.30 and fixed at $1796.50 a net gain of 0.41%. Our technical studies indicate that the first level for minor support occurs at $1785. The studies indicate major support occurs at $1770. There continues to be resistance between $1800 and $1805 per ounce, with major resistance at $1815 and $1833.

After reflecting on the extremely hawkish undertones in the minutes of the December FOMC meeting, market participants will wait to hear what the Federal Reserve says during the January FOMC meeting which will begin on January 25 and conclude the following day on the 26th.

Wishing you as always good trading and good health,