Search ForexCrunch
  • Precious metals were lower on the day, spot Gold ending around $1,505.
  • Silver prices dropped -0.39% to a low of $17.29 from a high of $17.70.
  • The increasing breadth of weakness in US growth signals will likely help to convince the Fed to cut once more in October.

Precious metals were lower on the day, spot Gold ending around $1,505 having travelled from a high of $1,515 to a low of $1,496 while Silver prices dropped -0.39% to a low of $17.29 from a high of $17.70. AUG/USD, the Gold and Silver ratio, was pretty much flat at 85.70 into the close following an initial spike to the upside as Gold continues to be favoured over Silver for its safe-haven status.  

However, Gold prices suffered their first loss in four sessions, despite a disappointment or two in the US Nonfarm Payrolls report. Not only did the headlines miss expectations, but wages were also a le down as well. However, to the US dollar’s and stock market’s rescue, the unemployment rate dropped to its lowest level in 50 years, to 3.5%, (lowest since December 1969) – albeit unlikely to sway the Federal Reserve from wanting to take measures to prevent a recession in the US economy.  

As for futures, December gold on Comex lost 90 cents, or a marginal 0.06%, to settle at $1.512.90 an ounce rising about 0.4% for the week. December silver lost 5.1 cents, or 0.3%, at $17.625 an ounce, with prices ending down nearly 0.2% for the week.

Fed to cut once more in October,  which in turn put a cap on gold’s rally

“The increasing breadth of weakness in US growth signals will likely help to convince the Fed to cut once more in October, and could even result in a shift in forward language, particularly if today’s jobs print reflects the same weakness,” analysts at TD Securities argued:

  • “While this is a positive for precious metals, it also helped spur strength in equity indices as Fed cuts alter money managers’ opportunity set, which in turn put a cap on gold’s rally.”
  • “We still expect CTAs to add shorts in equity indices as algos respond to limited upside momentum which is giving way to a strengthening downside trend.”

Gold levels

Gold ended on Friday paining a daily doji candlestick on the charts, closing above the 1500 psychological figure again after and advancing back towards 1520 ahead of a 1535 resistance level. Bulls will now look to the 1,550 target ahead of 1,590 as the 127.2% Fibo target.  On the downside, bears will look to break below a 50% mean reversion of the late June swing lows to recent highs around 1460/70 which guards the 19 July swing highs down at 1452.93. Eyes will then be on the 61.8% Fibo of the same range at 1449.56 ahead of a full 100% retracement to 1380.

Silver levels

As for Silver, prices were capped at the 21-day moving average the prior session and was supported by the 50-day moving average into Friday’s close, having recovered from a spike below the moving average earlier in the day.  Bulls will need to overcome a triple-top target of 18.60/80 before a run to the 19.60s and September highs. On the flip-side, bears can target the 61.8% down at 16.10 ahead of a run to the 200-day moving average down in the 15.80s.