Gold Rises On Superficial Employment Data
Today’s Spotlight Market
December non-farm payrolls were stronger than expected, with the US adding 252,000 jobs in the month of November.? The unemployment rate fell to 5.6% from 5.8% in November.? The November payroll numbers also received an upward revision of 32,000 jobs to 353,000.? On the surface, these numbers show an improving labor market, however, average hourly earnings fell to – 0.2%, indicating that many of the jobs added were low-wage jobs.?? The drop-off in hourly earnings could be seen as a positive for Gold traders, as the Federal Reserve may put off raising interest rates. ?
Fundamentals
The recurring theme for metal traders has been the idea that governments from China to Europe plan on injecting further stimulus to spur economic growth.? Fed Chairwoman Janet Yellen said the bank was unlikely to raise interest rates until April, at the earliest.? Traders are betting that the rate hike will not come until well after April.? While metal prices are up for the second consecutive month, many retail investors are not buying into the rebound just yet.? Holdings in the SPDR Gold Trust ETF are at their lowest level in more than 6 years.? The slide in Crude Oil prices has certainly not helped Gold?s rebound, and margin calls in energies could be negatively affecting the precious metals market.? Weaker industrial activity also has done little to help demand for Gold and Silver from manufacturing.? The lack of physical demand for Gold may not give investors confidence that this rally has real legs behind it.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the February Gold contract steadily moving higher since early November.? The Feb contract failed the most recent test of the 1225 level, which is near-term resistance.? Prices are also testing the 100-day moving average.? If prices are able to break through the average, Gold may gain a bit of momentum.
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