Gold closed up $9 (0.6%) on Thursday, buoyed by persistent global growth concerns centered on the coronavirus outbreak. There also continue to be rumblings about central banks potentially easing monetary policy in an effort to offset some of those growth risks.
Gold closed back above the 20-day SMA, but we're still watching the 1570.49 retracement level (50% of this week's decline). That level also corresponds pretty closely with the 9-day SMA.
We'll see if Friday's U.S. jobs report triggers such a move. It would likely take a pretty significant miss on the headline nonfarm payrolls number to return credence to the underlying uptrend and push gold back into the upper half of the recent range.
Median expectations for nonfarm payrolls are +163k and the jobless rate is expected to hold steady at 3.5%. In light of the significant ADP beat earlier in the week, I would suggest the odds are better for an NFP beat as well.
Risk to the downside is back to the 14-Jan low at 1535.94. Today's low at 1552.48 and Wednesday's low at 1547.51 provide good intervening barriers.
Silver had a decent day, climbing 19¢ (1.1%), but remains confined to the recent range. The white metal can't seem to decide whether it's a haven asset or an industrial metal and consequently choppy trading is likely to prevail.
While I still consider the underlying trend to be bullish, I'd be feeling better with a close back above $18.00. On the downside, last week's low at 17.38 is an important support. A breach of this level – particularly on a close basis – would favor a return to the next tier of consolidation centered on the $17.00 level.
The inability of the gold/silver ratio to sustain the recent return to the 90.00 level bolsters the bullish scenario for silver somewhat. On bullish breakouts, I like to see silver leading the charge.
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