Spot gold had an initially positive reaction to this morning’s U.S. jobs report, jumping to 1258.91 before retreating back into the range. Price action is presently confined to yesterday’s range.


U.S. nonfarm payrolls rose 213k in June, above expectations of +191k, versus a positive revised +244k in May (was +223k). However, the unemployment rate unexpectedly rose to 4.0%. A steady reading of 3.8% had been anticipated.


Average hourly earnings rose 0.2% in June, below expectations of +0.3%, versus +0.3% in May. With wages growing at a 2.7% annualized pace and PCE inflation now at the Fed’s targeted 2.0% level (and threatening to overshoot), U.S. workers continue to struggle. The average workweek held steady at 34.5 hours.


While the headline number and May revision were solid, the market seems to be at least initially focused on the uptick in the jobless rate. Both yields and the dollar are under pressure.


The dollar index fell through support at 94.17, confirming the double top at 95.53 (21-Jun and 28-Jun highs). Yesterday’s close below the 20-day moving average suggested potential to the 50-day MA, which comes in at 93.86 today. However, a measuring objective off the double top highlights support at 93.21/19.


A weaker dollar should help to underpin gold. However, a new high for the week above 1261.11 (03-Jul high) is needed to perpetuate the rally that began on Tuesday. Such a move would clear the way for a challenge of 1269.15/1272.60, where minor chart resistance corresponds closely with the 20-day moving average.


20180705 Gold Daily Chart


Unless we see that upside follow-through, key support at 1237.93/1236.45 (03-Jul low and 12-Dec-17 low) remains vulnerable to a retest. This level is further bolstered by the 200-week moving average at 1233.72.


Silver is consolidating right around $16. As we pointed out yesterday, this chart looks less constructive than the gold chart. However, the more positive technical tone of the yellow metal could help support silver.


A close above the 9-day MA (15.98) would offer some encouragement to the bulls. However, a breach of 16.36 (38.2% retracement of the decline off the June high) is needed to ease short-term pressure on the downside. Minor intervening chart resistance is noted at 16.16.


20180706 Silver Daily Chart


If yesterday’s low at 15.92 gives way first, emphasis swings right back to the 15.61 low from 12-Dec-17. Monday’s low at 15.76 provides good intervening support. Platinum recovery from the 10-year low at796.89 has stalled. Focus remains squarely on the downside with potential to the 2008 low at 732.50. Initial resistance is marked by Thursday’s high at 847.16.


Palladium continues to consolidate within the recent range. The symmetrical triangle chart pattern that has developed, favors an eventual downside breakout. A measuring objective off of this continuation pattern correspond closely to the 896.50 low from 06-Apr.


Of course the wild-card in all of this is the continued escalation of the trade war. With the latest U.S. tariffs imposed today, China claims that the U.S. has launched the largest trade war in economic history. We have seen retaliatory measures not only by China today, but by the EU and Mexico as well.



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