A significantly better than expected U.S. nonfarm payrolls number for November boosted risk appetite, pushing the precious metals lower on Friday. Gold closed about 0.6% lower on the week, while silver tumbled to new 4-month lows and notched a 2.5% loss for the week.
The U.S. Department of Labor reported that payrolls surged 266,000 in November, well above market expectations of 184,000. October's figure was revised higher from 125,000 to 156,000. The unemployment rate ticked lower to 3.5%.
Stocks rallied on the news with both the DJIA and S&P500 posting gains greater than 1%. Fed funds futures tumbled reflecting dimmed expectations of another rate cut any time soon, which sparked a bounce in the dollar.
Gold fell more than $16 (1.1%) on Friday, but the low end of the recent range remains protected at this point. Supports to watch are at 1450.05 (26-Nov low) and the range low at 1445.62. I feel that $1500 must now be regained to return confidence to the underlying uptrend.
Spot Gold Daily Chart
All in all, gold didn't fair too badly today; displaying a modicum of resilience in the face of a pretty sizable upside data beat. Silver, however, was not so fortunate and considerable damage has been done to the technical picture.
Spot Silver Daily Chart
The next support level to watch is the 16.34 Fibonacci level (61.8% retracement level of this past summer's impressive rally from 14.29 (28-May low) to 19.65 (04-Sep high). The rising 200-day SMA comes in at 16.23.
At this point, a move back above $17 is needed to ease pressure on the downside. It would take an even bigger retracement to even start thinking about the high end of the three-year range at 21.13. This level is now well protected by the September high at 19.65.
Spot Silver Monthly Chart
While I'm not feeling outright bearish on silver, today's price action within the context of the above monthly chart reflects why it's pretty difficult for me to be bullish. The marked rebound in the gold/silver ratio to a 15-week high is another reason why I'm not terribly enthusiastic about silver.
Next week the U.S. economic calendar features CPI (+0.2% expected), PPI (+0.2% expected), and Retail Sales (+0.5% expected. Most importantly the Fed will hold their 2-day FOMC meeting. While the Fed is likely to hold steady on policy, Friday's robust jobs data may factor into guidance.
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