Gold Retreats Following Surprisingly Weak October Jobs Report

Gold prices edged lower Friday, despite an unexpectedly weak U.S. employment report that significantly missed even the most conservative estimates.

The U.S. Bureau of Labor Statistics reported a mere 12,000 new jobs added in October, plummeting from September's revised figure of 254,000. This fell dramatically short of consensus forecasts, which had already been tempered due to anticipated impacts from recent labor strikes and hurricane disruptions. Bloomberg's estimate of 105,000 and FactSet's projection of 120,000 both proved overly optimistic.

The stark unemployment figures were heavily influenced by labor strikes in the manufacturing sector strikes and the impacts of hurricanes Helene and Milton on southeastern states. Analysts suggest these factors may have contributed to an undercount of actual job creation, though the extent won't be clear until future revisions.

Despite the weak employment data, gold faced headwinds from a strengthening dollar and rising Treasury yields. The dollar index advanced 0.43% to 104.442, while the 30-year bond yield climbed 0.105 basis points to 4.58%. The 10-year Treasury note yield similarly increased by 0.102 basis points to 4.386%.

Market sentiment, as reflected in the CME's FedWatch tool, now indicates a 97.9% probability of a 25-basis-point rate cut, up slightly from yesterday's 94.8%.

In trading activity, December gold futures settled at $2,743.90, down $9.70 for the day and $16.90 for the week. The precious metal had briefly touched $2,764.90 before succumbing to afternoon selling pressure. Spot gold finished at $2,733.36, recording a $10.27 decline. SPDR Gold shares turned negative late in the session, dipping 0.1%, though Dow Jones noted recent overall strength in gold positioning.

Technical analysis suggests potential support levels ahead. Using Fibonacci retracements from the October 9 low of $2,621.50 to this week's high near $2,800, gold has already breached the 23.6% level and currently tests the 38.2% retracement at $2,733.20. The 50% retracement level at $2,711.80 coincides with late September's previous peak, potentially offering additional support.

Looking ahead, several factors could provide support for gold prices: the upcoming presidential election, escalating geopolitical tensions, and sustained central bank gold purchases. These long term bullish forces will take gold to a new all-time record high by year's end. While we may see lower prices before this correction ends, those will most likely be short lived and can be viewed as noise by simply zooming out from the daily time frames.

Wishing you, as always good trading,