- By the end of last week’s trading, gold futures extended their series of gains.
- By performance, the XAU/USD gold price rose after the tepid US jobs report for December, which saw wage growth less than expected.
- Financial markets rebounded as data showed progress in combating inflation, which may push the US central bank to slow the pace and scale of interest rate hikes this year.
XAU/USD gold prices posted a weekly gain of 1.88%, taking its three-month performance to nearly 10%. The XAU/USD gold price rose towards the resistance level at $1870 an ounce, the highest price in seven months. In the same performance, silver prices, the sister commodity to gold, tried to climb above the $24 resistance level once again. The silver futures contract advanced to $24.00 an ounce. Accordingly, the price of the white metal recorded a weekly loss of approximately 0.8%.
In general, precious metals joined the rally in global markets on Friday, after the US government announced the gold jobs report: optimistic, but not very strong. According to the Bureau of Labor Statistics (BLS), the US economy added a total of 223,000 new jobs in December, above the market estimate of 200,000. This was down from a downwardly adjusted gain of 256,000 in November.
According to the report, the US unemployment rate fell to 3.5% in December, down from 3.6% in November. It also came in below economists' expectations of 3.7%. Average hourly earnings fell 4.6% year over year in December and average hourly earnings rose just 0.3% month over month to nearly $33. Wage growth last month was also revised to 0.3%. The average weekly hours decreased to 34.3.
In addition, the total US non-farm payrolls in October and November were revised by 21,000 and 7,000, respectively.
Investors were pleased with the US jobs report because it was good but not very strong. With signs of declining inflation and the US central bank close to achieving its target, gold prices could continue their climb. “Given this macroeconomic backdrop, it seems remarkable that the gold price is still on the upswing and is able to build on the impressive price recovery since the beginning of November,” said Robert Rowling, market analyst at Kinesis Metals.
Economic data on Friday
US factory orders fell 1.8% in November and the Institute for Supply Management (ISM) non-manufacturing PMI fell to 49.6 in December, the first time the reading has contracted since early 2020.
There are other developments in the financial markets that supported gold.
The US Dollar Index (DXY), which measures the performance of the greenback against a basket of major currencies, fell to 104.55, from an opening of 105.04. All in all, the dollar index rose by 1% last week. A weaker dollar is beneficial for dollar-denominated commodities because it makes it more expensive for foreign investors to buy them.
Other factors affecting the gold market
US Treasury market yields were mostly in decline, with the benchmark 10-year yield dropping 12.5 basis points to 3.597%. Bond yields for the month rose 1.6 basis points to 4.196%, while 30-year yields fell 8.2 basis points to 3.715%. The 2-year and 10-year yield spread is still hovering around -50 basis points.
For other metals markets, copper futures jumped to $3.87 a pound. Platinum futures rose to $1,092.50 an ounce. Palladium futures rose to $1,780.00 an ounce.
Technical outlook for the XAU/USD gold price today:
In the near term and according to the performance of the hourly chart, it appears that XAU/USD gold price has recently completed an upward breach from the descending channel formation. This indicates a sudden change in market sentiment from bearish to bullish. Therefore, the bulls will look to pounce on the extended gains at around $1869 or higher at $1878 an ounce. On the other hand, the bears will target potential pullbacks around $1852 or lower at $1844 an ounce.
On the long term, and according to the performance on the daily chart, it appears that the yellow metal XAU/USD is trading within a bullish channel formation. This indicates a significant bullish momentum in the long-term market sentiment. Therefore, the bulls will be looking to extend the current series of gains towards $1893 or higher to $1930 an ounce. On the other hand, the bears will look to pounce on profits at around $1832 or lower at $1794 an ounce.
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