Gold Price Prediction – Gold Breaks Out on Soft Payroll Data

Gold prices surged higher on Friday rising 1.8% as trade turmoil and a smaller than expected rise in non-farm payrolls. The prior month employment report was also revised lower. Hourly earnings were also smaller than expected which means that the Fed will likely moderate future rate hikes.

Technical Analysis

Gold prices surged higher breaking through the October highs at 1,244 which is now seen as short term support. Resistance is seen near the 50-day moving average at 1,257. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to accelerating positive momentum. The RSI (relative strength index) surged higher breaking out which also reflects accelerating positive momentum. The current reading of the RSI is 39, which is on the lower end of the neutral range.

Non-farm Payrolls Increased by Less than Expected

Nonfarm payrolls increased by 155,000 in November according to the Labor Department while the unemployment rate again held at 3.7%, its lowest in 5-decades. Expectations were for payrolls to increase by approximately 200K jobs, and the unemployment rate to remain unchanged.

The BLS also reported that average hourly earnings, 3.1% year over year which was in line with expectations. Wage gains are closely watched as a sign of inflation. The monthly earnings gain of 0.2% fell short of estimates for a 0.3% increase. The average work week edged lower by 0.1 hours to 34.4 hours. This reduced the number of jobs created by approximately 50K. Job creation skewed to services-related industries, which added 132,000, while goods producers grew by 29,000, the lowest increase since March. Government jobs declined by 6,000.

In addition to the November jobs report falling below expectations, October’s count was revised lower from an initially reported 250,000 to 237,000. September’s total was revised up from 118,000 to 119,000.