(Kitco News) – Gold prices are modestly up and hit a 3.5-month high in morning U.S. dealings Friday, and have rallied in the wake of a U.S. jobs report that was much weaker than expected. Gold prices have backed down from the initial surge after the employment report, on some profit taking by the shorter-term futures traders ahead of the weekend. Notions are on the rise the Federal Reserve will soon be cutting U.S. interest rates. That’s bullish for the precious metals markets. August gold futures were last up $3.10 an ounce at $1,345.70. July Comex silver prices were last up $0.075 at $14.98 an ounce.
Friday morning’s employment situation report for May from the Labor Department showed a rise in non-farm payrolls of only 75,000. That of the report was forecast at up 180,000. Wednesday’s ADP national employment report for May showed only 27,000 jobs added in the month. That anemic number tipped off many market watchers to a tepid number in today’s more important jobs report. Today’s downbeat jobs report today significantly raises the odds of the Federal Reserve cutting U.S. interest rates sooner rather than later—and possibly this month.
U.S. Treasury bond yields dipped on the employment news, while the U.S. dollar index sold off and fell to a six-week low.
European and Asian stock indexes were mostly firmer overnight. U.S. stock indexes are pointed toward slightly firmer openings when the New York day session begins. The U.S. indexes have posted solid gains this week and have regained bullish technical momentum after hitting three-month lows on Monday.
In overnight news, the German central bank said German economic growth this year will only be 0.6% compared to 1.5% seen in 2018. Germany is the workhorse of the Euro zone economy. The European Central Bank on Thursday leaned more dovish and suggested it could further ease its monetary policy soon.
The other key “outside market” today sees Nymex crude oil prices firmer and trading just above $53.00 a barrel after dropping to a nearly five-month low on Wednesday.
Other U.S. economic data due for release Friday includes monthly wholesale trade and consumer credit.
Technically, the gold bulls have the firm overall near-term technical advantage and gained some more power today. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the February high of $1,361.50. Bears’ next near-term downside price breakout objective is pushing August futures prices below solid technical support at $1,325.00. First resistance is seen at today’s high of $1,349.80 and then at $1,361.50. First support is seen at the overnight low of $1,334.30 and then at $1,330.00. Wyckoff’s Market Rating: 7.0
July silver futures bears still have the slight overall near-term technical advantage. However, in a three-month-old downtrend on the daily bar chart has been negated this week to suggest a market bottom is in place. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.40 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.50. First resistance is seen at this week’s high of $15.04 and then at $15.12. Next support is seen at Thursday’s low of $14.73 and then at this week’s low of $14.565. Wyckoff’s Market Rating: 4.5.
By Jim Wyckoff
For Kitco News