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  • Gold and silver falling to their 21 DMAs.
  • Powell and NFPs keep the bid in Dollar alive.  

Gold and silver prices on Friday were lower on Friday as the market continues to correct within a risk-on theme. By contracts, risk asset classes such as stock and all were higher, with the strongest currencies being the Aussie, CAD and NZD as the top performer (with a lot of ground to make back).  

Spot Gold ended on Wall Street -0.86% at $1,505 having travelled from a high of $1,527.90 to a low of $1,502.74. Its sister currency, Silver, ended -3.24% having fallen from a high of $18.79 to a low of $17.97 – Subsequently, the Gold and silver ratio was higher by 2.35% travelling from 81.06 to a high of 83.62. December gold dropped $10, or 0.7%, to settle at $1,515.50 an ounce on Comex, after trading as high as $1,536.20 while  December silver was losing 68.8 cents, or 3.7%, to $18.119 an ounce, turning lower by 1.2% for the week.  

Both Gold and silver futures also settled lower Friday following Federal Reserve Chairman Jerome Powell’s positive tones over the outlook for the US economy which tempered the recession pundits and stripped away some of the speculative bid in precious metals as the Dollar put up a robust performance, despite a slight disappointment in the Nonfarm Payrolls data.

Nonfarm Payrolls, a bit for everyone

The U.S. created just 130,000 new jobs in August vs the 158k expected on the headline and below the 159k prior (downwardly revised). However, there was something for everyone in the U.S. employment reports for August. “Those calling for aggressive rate cuts from the Federal Reserve will focus on a weaker-than-expected headline, however, “others, calling for a more measured approach by the Fed, will note that the establishment survey’s job gains are enough to absorb new entrants in the labour force, but will also point out gains in cyclical sectors such as construction and manufacturing (which suggest the U.S. expansion continued in Q3), further increases in temporary employment (a good leading indicator), and most of all the blockbuster household survey,” analysts at National Bank of Canada argued.

“All in all, despite the moderation in non-farm payrolls, the U.S. labour market remains tight and suggests the economic expansion is continuing. As such, the Fed is likely to carry on with its measured approach to dealing with risks posed by the ongoing trade war by cutting its fed funds rate by no more than 25 basis points at its meeting of September 18th.”

Gold levels

With the price now back below the 21-day moving average and the  23.6% Fibonacci (Fibo) retracement of the July lows to recent swing highs, on a break below the 1,500 level, bears can approach 1,478 as the 13 August volatility spike low which guards the 19 July swing highs at 1,452.93. Bulls need to get back above the 1,550 mark to ope prospects for the n 1,590 as the 127.2% Fibo target area. Thereafter, bulls can target the 78.6% Fibo of the 2011 to YTD range located in the 1,730s ahead of the triple-top peaks of the 1,800s.

Silver levels

Bears have been in control hunting down the 23.6% Fibo retracement of the late May swing lows to recent swing highs around 18.38 and have accomplished a test below the handle. Eyes now turn to the 21-day moving average just below the lows of the session and then bears will look to the  17.50s a being the 50% Fibo of 2016 highs to recent swing lows.   On the upside,18.50 and 19.50 will be the milestones from here ahead of    the round  22, the 27s and finally, a 50% mean reversion of the 2011 highs YTD in the 31.70s.