In light of an incredibly strong jobs report today gold pricing held up rather well. This morning the U.S Labor Department reported that there were 304,000 new jobs added in January. This number came in much higher than estimates from analysts who were predicting that gains in January would come in around 165,000.
That being said gold futures basis the most active April contract is currently trading down only $3.20, and fixed at $1322.00 per ounce. At the same time, one would expect the robust numbers to be highly supportive of U.S equities. However, the Dow is in essence unchanged, the Standard & Poor’s 500 is down about 0.20% and the NASDAQ composite is down by almost 0.50%.
Although it is believed that some of the lack luster enthusiasm is related to December’s data which was revised down to 222,000 jobs, the largest revision since 2014.
One primary reason for gold’s resilience in light of the strong jobs report is that market sentiment continues to be extremely bullish given statements released this week immediately following the FOMC meeting by Chairman Powell. The much more dovish tone by the Federal Reserve continues to be highly supportive of gold pricing. Also, there are geopolitical hotspots such as Venezuela that remain unresolved. Most importantly the current trade war-dispute between the United States and China contains more uncertainty than resolution, and as such remains a strong wildcard that could flare up at any moment.
In an interview with MarketWatch, Fawad Razaqzada, technical analyst at Forex.com said, “In a way, the jobs report doesn’t really change anything as far as the Fed is concerned because they were expecting the labor market to be strong”.
The data over the last four months strongly suggests that bullish sentiment for gold has been growing and continues to gain momentum to this day. Gold prices gained roughly 3% last month, and represents the fourth consecutive monthly gain. As long as the Federal Reserve maintains its new dovish demeanor, we can look for the precious metal to continue to have strong support and gain or at least hold pricing at current levels.
Wishing you as always, good trading,