Today’s jobs report for September showed a decrease in monthly gains, with 263,000 new jobs added last month, a decline from the prior month in which 315,000 new jobs were added.

There is an adage when investigating a crime that says to “follow the money”. In the same way, when investigating where gold prices will be headed short-term it is wise to follow the upcoming reports. Two key reports will shape the short-term direction and price of gold.

We have seen the gold prices move up approximately $100 since the low that came in last Wednesday. As we spoke about on yesterday's show, we will look to enter a long position in December gold on a dip. Today’s low came in at $1708 which is why we believe on one more move down we could easily trade to $1700 to $1705 in which we would execute the limit order.

Gold continues to gain ground with very strong technical potential to move substantially higher. Over the last five trading days, gold hit a bottom at approximately $1621 and gained well over $100 in a short time. As of 5:21 PM, EDT gold futures basis the most active December contract is currently trading at $1734.70 after factoring in today’s gain of $32.70 or 1.92%.

Yields on U.S. debt instruments such as the 10-year note, and 30-year bonds have been rising as the Federal Reserve has raised interest rates at each of the last FOMC meetings since March of this year. Currently, the Fed funds rate is between 3% and 3 ¼%.

Today key reports released in both the United States and the Eurozone revealed what global citizens have been acutely aware of. Inflation continues to spiral higher and at a staggering level. This prompted Credit Suisse to issue a dire global economic outlook, saying that the “worst is yet to come”.

As of 4:21 PM EDT gold futures basis, the most active December futures contract is currently fixed at $1668.90 a net decline of 0.07% or $1.10. Gold futures did trade to a slightly higher high and a higher low than yesterday. However, yesterday’s relief rally took gold from a low of approximately $1622 and closed at $1670.

Since May 2021 gains in the U.S. dollar can be best described as parabolic. The dollar index was trading at approximately 89.60 in January 2021, and in one year nine months have moved from just below 90 to 114.745 a total gain of 24.745 points. In other words, the dollar index when compared to a basket of six foreign currencies gained 21.91% in value.

Although gold is trading fractionally higher today, by no means can we say that a rally has begun or that this is the beginning of a potential pivot and key reversal from bearish to bullish. The fate of gold pricing remains intrinsically tied to dollar strength or weakness. In the current economic scenario, it is dollar strength that is overwhelmingly moving gold to lower pricing.

Powell’s Federal Reserve has been faced with one of the most difficult periods in time that began with a global pandemic which led to a global economic shutdown. This led to an extreme and some say incorrectly allocated government stimulus.