June non-farm payrolls came in the morning far higher than expected, causing an already-easing gold price to gap down over $20 to oscillate like a seismograph in an earthquake. After all the automated High-Frequency Trading programs had finished battling each other, gold recovered to its previous level around $1,360 an ounce.
Spot silver prices were also temporarily hit by the payrolls report, but soon bounced back to gain more than 1% over its beginning levels. The DXY dollar index exhibited much the same behavior, but in reverse. All in all, the surprisingly high payroll report has had a surprisingly brief effect on precious metals and currencies.
This morning’s non-farm payrolls report showed that 287,000 new jobs were added in June. Analysts had expect around 175,000, so this was a huge surprise. May’s abysmal 38,000 in jobs gains was revised to an unbelievably low 11,000. Unemployment rose more than forecast, from 4.7% to 4.9%. Experts were expecting 4.8%.
Gold is working to extend its weekly rally to six, while silver seems to have the matter well in hand. Gold was up 9.7% for the week at the start of trading in New York, while silver has soared 26%. According to Fawad Razaqzada at Forex.com, gold is facing a major resistance line on the weekly chart dating back to the all-time highs hit in 2011. When gold manages to breach this line, the new bull market in gold will be confirmed.
Technical numbers have gold’s first resistance at $1,363, then $1,375. Support first comes in at $1,336, then 1,321. Silver shows resistance at $19.74, then $20.02. Support is at $19.56, then $19.36.
Spot gold closed near the middle of its trading range Thursday at $1,359.80 an ounce, a loss of $3.40. August gold futures on the COMEX broke a three-day win streak to settle at $1,362.10 an ounce, for a loss of $5.00.
Spot silver lost 2% yesterday, to close 41 cents lower at $19.65 an ounce. September silver futures lost 36-½ cents to settle 1.8% lower, at $19.838.
The main commodities exchanges decided that the record-breaking open speculative positions in precious metals were overheating the market, so have raised the margin requirements. Speculators now have to decide if they want to put down the extra cash to maintain their positions, or close some of them out. This development has added a little selling pressure to precious metals for the last two days.
Oil futures took a nasty tumble yesterday, at one point down more than 5%. Crude prices have been weighed down by Brexit-fueled fears of a global slowdown in demand. Once again, Wednesday’s numbers from the American Petroleum Institute set traders up for a fall. API reported a big 6.7 million barrel drawdown of US crude stockpiles, but yesterday’s official numbers from the Energy Information Administration showed a much smaller 2.2 million barrel draw.
August WTI futures settled down 4.8% to $45.14 a barrel. Brent futures fell 4.9% to end at $46.40 a barrel. Both contracts are up approximately 1.2% this morning.
The Brexit vote has pummeled the pound sterling to the point that it is now the world’s worst performing currency. The GBP has dethroned the Argentine peso, which is being devalued on purpose, as posting the highest losses against the US dollar for the year. The pound had gained a bit immediately after this morning’s payrolls report, but quickly gave it back.
Speaking of currencies, the dollar saw a marginal 0.1% gain against a basket of major currencies yesterday. This morning finds it trading up by a similar amount. The euro is gaining slightly after a blip downward on the US payrolls report, while the yen continues its rampage against all opponents.
Wall St opened solidly higher on this mornings non-farm payrolls, after closing mixed on Thursday. The Dow and S&P 500 closed just on the wrong side of unchanged, with 0.1% losses. The Nasdaq gained 0.4% for the day. The big drop in oil prices were the main factor for the losses.
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