Wage Boost Snaps Gold's Streak - Gainesville Coins News
No Minimum order! We accept Pay with Credit Card
Call Us: (813) 482-9300 Mon-Fri 9:00AM-6:00PM EST
Login or Register
Log into your account
About Gainesville Coins ®
Billions Of Dollars Bought And Sold A+ BBB Rating 10+ Years No Hidden Fees Or Commissions All Inventory Ships Directly From Our Vault

Wage Boost Snaps Gold's Streak

blog | Published On by
Wage Boost Snaps Gold's Streak
Wages in dollars.

Non-farm payrolls in the US came in under expectations at 151,000, far beneath December's big gains. However, unemployment dropped a tenth of a point to 4.9%, and wages grew at a 2.5% annual pace. These "under the hood" numbers caused a giant spike in the dollar, as currency traders saw  the data as a sign that the Fed would be more likely to raise interest rates this year.

This spike in the dollar weighed on gold prices, and ignited profit-taking and technical selling. Spot gold hit a fresh 3-1/2 month high of $1,162.90 shortly before the release of the non-farms payroll data, up $7.50 from Thursday's close. The sharp dollar rally quickly sent the yellow metal down to test the firm support line at $1,145 an ounce.

A New Hope

space-travel-154020_640

Much like Princess Leia's plea to Obi Wan Kenobi, dollar bulls saw today's non-farm payrolls report as "our only hope." The beleaguered greenback had been suffering from its worst two-day drop in seven years. While hiring disappointed, wage growth pointed towards the possible start of inflation. This increases the chance that the Federal Reserve will raise interest rates again this year, despite the market chatter that they were "one and done."

The CME Group FedWatch tool this morning is showing a sharp increase in the odds of a rate hike later this year. The December odds have gained 11% to stand at a 40% chance of the Fed increasing interest rates. Higher benchmark interest rates produce a stronger dollar.

The support that a weaker dollar gave stocks and crude oil futures evaporated this morning, with Nymex crude down nearly 2.5% in early trading, and the Dow over 100 points lower.

Testing the Gold Floor

gold-rally

The soaring dollar set off profit taking in gold this morning, interrupting its four-day rally and sending prices down to test the strong support level at $1,145 an ounce. Some analysts point out that the wage growth shown in today's payroll report may be the result of 14 states raising their minimum wage on January 1st, rather than any real wage growth.

After spending an hour stomping on the $1,145 level to see if it would hold, gold rose back above the $1,150 mark. Traders will be watching to see how much territory gold will regain against a still-rising dollar.

Technical analysis have support at $1,145, with $1,136 (61.8% Fibonacci level) as the next stop. First resistance has changed to $1,157 (the 76.4% Fibonacci retracement) with $1,169 the next line in the sand.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product

This site uses cookies for analytics and to deliver personalized content. By continuing to browse our site, you agree that you have read and understand our Privacy Policy.