Gold prices have taken a hit following the release of an unexpectedly robust U.S. employment report for September. The data, which revealed substantial job gains, has reinforced expectations that the Federal Reserve will maintain its hawkish approach to monetary policy. December gold has touched a 10-month low, leaving investors and analysts watching closely.
In the wake of the report, December gold saw a decline of $5.40, settling at $1,825.90, while December silver managed to inch up slightly by $0.006, reaching $21.00.
The Labor Department’s September U.S. employment situation report delivered a surprising non-farm payrolls figure of 336,000, far exceeding the anticipated rise of 170,000. This robust employment growth comes on the heels of August’s report, which showed a gain of 187,000 non-farm jobs. However, not all aspects of the report were equally strong, as the overall unemployment rate held steady at 3.8%, failing to meet the expected 3.7% reading. The unexpected strength in the jobs market has solidified the emerging narrative of the Federal Reserve maintaining higher interest rates for a more extended period.
Global markets reacted differently to the news, with Asian and European stocks posting mixed but mostly higher results overnight. In contrast, U.S. stock indexes are expected to open lower following the release of the impressive jobs report.
The U.S. dollar index surged solidly in response to the report, rebounding from a slight overnight decline. Nymex crude oil prices, meanwhile, have weakened and are hovering around $81.50 a barrel, a notable dip from last week’s spike above $95.00. Concurrently, the benchmark U.S. Treasury 10-year note yield has risen to 4.84%, marking further gains post-report.
Investors are also awaiting the release of other U.S. economic data, including the consumer credit report.
From a technical standpoint, the bears continue to hold a firm near-term advantage in gold futures, as prices remain in a persistent four-month downtrend on the daily bar chart. To reverse this trend, bulls would need to achieve a close in December futures above robust resistance at $1,900.00, while the bears’ next near-term objective is to push futures prices below solid support at $1,800.00. Initial resistance levels stand at the overnight high of $1,848.80 and $1,850.00, while support is visible at $1,815.00 and $1,800.00.
For silver, the bears also maintain a solid overall near-term technical advantage, with prices following a downward trend on the daily bar chart. Silver bulls’ next objective is to close December futures prices above substantial technical resistance at $23.00, while bears aim to drive prices below solid support at $20.00. Resistance levels can be found at Tuesday’s high of $21.595 and $22.00, with support at this week’s low of $20.85 and $20.50.
As gold and silver prices respond to shifting economic data and the Federal Reserve’s stance, market participants are bracing for continued volatility in the precious metals market.