Friday July 5, 2013 9:00 AM
(Kitco News) - Gold prices dropped sharply in the immediate
aftermath of a U.S. employment report for June that showed
better-than-expected jobs growth, including upward revisions for
jobs in April and May. The U.S. dollar index pushed to a three-year
high on the jobs data, which also helped sink the gold and silver
markets. August gold was last down $32.10 at $1,219.80 an ounce.
Spot gold was last quoted down $31.60 at $1,221.40. September Comex
silver last traded down $0.679 at $19.01 an ounce.
The U.S. Labor Department reported non-farm payrolls increased
by 195,000 in June, which was significantly better than the 160,000
rise expected by the market place. The overall unemployment rate
was unchanged from May, at 7.6%. The upward non-farm job revisions
in April and May totaled around 70,000 for both.
The improving U.S. labor market lent additional weight to the
hawkish camp of Fed watchers who think the Federal Reserve will
start to back off on its quantitative easing of monetary policy
(so-called "tapering") as soon as later this year. That is seen as
at least initially commodity-market bearish, including the precious
metals. The very easy money policies of the major central banks of
the world have boosted raw commodity prices in recent years.
The market place is also anxiously watching developments in
have risen Friday on news that a state of emergency has been
declared in the Suez and South Sinai provinces of Egypt. Reports
said there was an Islamist attack at the Arish Airport. While
reports said the Suez Canal is operating normally, any disruption
of one of the world's most important major world waterways would be
very market-sensitive. Earlier this week the Egyptian military
overthrew the sitting president and installed its own temporary
leader. Any escalation of violence in Egypt or the Middle East
could prompt fresh safe-haven demand for gold.
European stocks were narrowly mixed early Friday as the U.S.
jobs report was awaited. Traders are still digesting the somewhat
surprising news from the European Central Bank and the Bank of
England Thursday, in which both gave forward guidance and said they
would keep interest rates low for the foreseeable future. The
market place perceived central banks' statements to be firmly on
dovish side. The Euro currency has seen selling pressure following
the ECB meeting.
The London A.M. gold fix is $1,232.75 versus the previous London
P.M. fixing of $1,251.75.
Technically, the gold market bears remain in near-term technical
command. August gold futures prices are still in an eight-month-old
downtrend on the daily bar chart. The gold bulls' next upside
near-term price objective is to produce a close above technical
resistance at $1,300.00. Bears' next near-term downside breakout
price objective is closing prices below solid technical support at
last week's low of $1,179.40. First resistance is seen at this
week's high of $1,267.00 and then at $1,275.00. First support is
seen at Friday's low of $1,215.90 and then at $1,200.00.
Silver bears have the solid overall near-term technical
advantage. Prices are in an overall eight-month-old downtrend on
the daily bar chart. Silver bulls' next upside price breakout
objective is closing prices above solid technical resistance at
$21.00 an ounce. The next downside price breakout objective for the
bears is closing prices below solid technical support at last
week's low of $18.17. First resistance is seen at $19.50 and then
at the overnight high of $19.83. Next support is seen at the
overnight low of $18.81 and then at $18.50.
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By Jim Wyckoff, contributing to Kitco News; email@example.com