Gold Shows Extreme Resilience in Light of a Strong Jobs Report

February 1, 2019 - 5:46pm

 by Gary Wagner

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,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action
On Sunday, January 27,  we sent out a trade alert to buy April Gold
Thursday morning we sent out a trade alert to raise stop
Maintain long gold at  $1307. Maintain stop at $1310.13
 
Gold Market Forecast
Today's lower pricing follows two days that have both been a "doji candle". According to Wikipedia " The doji is a commonly found candle in a candlestick chart of financially traded assets. It is characterized by being small in length—meaning a small trading range—with an opening and closing price that are virtually equal.
 
The doji represents indecision in the market. A doji is not as significant if the market is not clearly trending, as non-trending markets are inherently indicative of indecision. If the doji forms in an uptrend or downtrend, this is normally seen as significant, as it is a signal that the buyers are losing conviction when formed in an uptrend and a signal that sellers are losing conviction if seen in a downtrend."
 
Therefore: we could see lower gold next week
Sentiment Indicator:
Gold -> Neutral
Silver -> Neutral
S&P 500 -> Neutral
Bitcoin -> Bearish