Metals: Gold Pauses Declines Ahead of US Payrolls Report
Gold steadied near seven-month lows on Friday as the US dollar and bond yields, which scaled fresh highs this week, took a breather, and investors awaited US non-farm payrolls data that could affect the interest rate outlook.
Spot gold was flat at $1,819.60 per ounce and was on track to log a second consecutive weekly loss, shedding 1.6% so far. US gold futures firmed 0.1% to $1,834.
Benchmark US 10-year bond yields pulled back from a 16-year peak, and the US dollar was off November 2022 highs but remained on track for 12 straight weeks of gains.
Market Anticipation for US Jobs Data
“I think the market doesn’t quite have conviction to keep going at this point until the US jobs data comes out,” said Ilya Spivak, head of global macro, Tastylive.
Markets await the release of US non-farm payroll data at 1230 GMT, following a string of jobs indicators released this week.
“Inflation is multifaceted. To reduce the likelihood of interest rates not going up, we would need to see significantly more unemployment and a much lower energy price,” said Michael Langford, chief investment officer at Scorpion Minerals Ltd.
Federal Reserve’s View on Treasury Yields
Federal Reserve officials on Thursday indicated little concern that the recent rise in US Treasury yields could imperil a “soft landing” for the economy. They said it could actually help the central bank fight inflation.
SPDR Gold Trust, the world’s largest gold bar exchange-traded fund, said its holdings hit the lowest levels since August 2019 on Thursday.
Analysis and Near-Term Outlook for Selling Gold and Silver Prices
Gold and Silver: Near-Term Technical Update
Gold and silver prices take a breather from losses. This allows support levels to be reinforced. What are the key levels to watch in the event of breakouts?
XAU/USD Analysis
In recent days, gold bullion bars have pressed the brakes, bringing their losing streak since late September to a pause. Given recent price action, how is the near-term technical outlook shaping up for precious metals?
On the daily chart below, we can see that commodity gold has confirmed a breakout under rising support from earlier this year. Meanwhile, a bearish Death Cross has recently formed between the 50- and 200-day moving averages. As such, the technical outlook remains broadly focused on the downside.
In recent days, prices have confirmed a breakout under the midpoint of the Fibonacci retracement level of 1848.37. That is now placing the focus on the current 2023 low of 1804.78 as immediate support. As such, a bounce is possible. However, the moving averages may hold as resistance, maintaining the broader downside focus.
Otherwise, extending lower exposes the 78.6% Fibonacci retracement level of 1714.83 as a medium-term bearish objective.
XAG/USD Analysis
Meanwhile, silver prices are facing a similar landscape. Like gold, XAG/USD has confirmed a breakout above rising support. Losses in the previous week have brought prices to test support, which is the 61.8% Fibonacci retracement level of 20.83.
A hold at support and subsequent bounce would shift the focus on the midpoint of the Fibonacci retracement here as well, around 21.85. The latter may hold as resistance, potentially reinstating the near-term bearish perspective.
Otherwise, continuing lower from here exposes the 78.6% level of 19.39 before the 17.56 – 18.09 support zone from last year comes into focus.
