- Gold ends the Wall Street session with a slight pullback into the weekend.
- Profit-taking and a slight bid back in the Dollar held up the bulls.
Gold was subject to the end of the week and Nonfarm Payroll induced profit taking with prices in the yellow metals falling around 0.30% into the close on Wall Street. Gold was trading, on a spot basis, at around $1,441 having travelled between a range of $1,430.45 and $1,449.30.
The yellow metal gave back some ground on Friday, but that is too be expected given the sheer amount of ground its covered since the trade tariff scare that sent prices around $45.00 higher on the day in the prior session. Gold can still attract a bid on risk-off concerns and taking a look around, if copper is anything to go by, encroaching on two-year lows as trade wars intensify, then precious metals can likely continue to draw in investment.
The Dollar plunged from close to the 99 figure highs all the way back to test the resilience of the 98 figure, scoring a low of 98.05. This also enabled gold’s futures prices to settle at a more than a six-year high on Friday. December gold climbed $25.10, or 1.8%, to settle at $1,457.50 on Comex and was the highest close for a most traded contract since May 9, 2013.
Indeed, the signs of an intensifying trade war forced US yields and the greenback sharply lower as trader’s called the Fed’s bluff. Notwithstanding the Fed’s messaging, expectations that rates are headed towards zero in the USA grew, with the market pricing in 50bp of rate cuts in 2019.
“While the move in rates appears reasonable, as Powell referenced trade uncertainty as a key driver of future rate cuts, gold could still have room to shine considering its convexity related to its zero-coupon nature and uber-long duration.”
Nonfarm Payrolls were solid enough
Nonfarm payrolls matched expectations, coming in at 164k following last month’s downwardly revised 193k print. However, they were solid enough and something for everything could be found in the details behind the inline headline.
“The 3-month and 6-month averages slowed to around 140k “” still more than sufficient to absorb new entrants into the labor force, but well off the 240k pace in January. Private service sector jobs led the gains with a 133k increase, which were explained by notable increases in education (66k), finance (18k) and professional services (38k). Employment gains in the goods sector rose at half of last month’s at 15k, with increases in the manufacturing sector (16k) partly offsetting weakness in construction jobs (4k). Despite ongoing woes in manufacturing sentiment indices and trade uncertainties, the manufacturing sector managed to register its strongest gain since January. Note, however, that the trend in manufacturing growth remains relatively soft amid global uncertainties,”
analysts at TD Securities explained.
Technically, Gold remains in bullish territories above the 20-day moving average and holds above the 78.60% retracement of the recent ranges as bulls look to the July swing highs of 1453.95. On a reversion, a 23.6% retracement to the 1435 level comes into play. 1421 marks the confluence of the 20, 50 and 200 daily moving averages.