Gold is edging high ahead of the weekend, establishing new 21-week highs in the wake of this morning’s U.S. jobs miss. The yellow metal is up nearly 2% on the week as haven interest resurfaced amid continued stock market volatility and the partial inversion of the yield curve.

U.S. nonfarm payrolls for November came in at +155k, below expectations of +200k. October payrolls were revised lower to +237k, versus +250k previously. The jobless rate held steady at 3.7%.

Average hourly earnings in November rose 0.2%, below expectations of +0.3%, versus negative revised +0.1% in October. The average workweek ticked lower to 34.4 hours on expectations of 34.5 hours.

While the Fed is still expected to hike rates on 19-Nov, softer than expected jobs data adds to the case for a pause in the current tightening cycle in 2019. Rising growth risks, weaker U.S. data, stock market losses, yield curve inversion and more dovish FedSpeak are all contributing to expectations that the Fed may only hike once in 2019.

There has been talk of potential yield curve inversion for much of the year, yet when the 2-year and 5-year and 3-year and 5-year finally inverted earlier in the week, the market seemed to be caught totally off-guard. An inverted yield curve is a classic harbinger of recession. In fact, an inverted yield curve has preceded every recession since 1955.

This has investors spooked, which has boosted haven interest in the precious metals. However, while the dollar has softened in recent session, it remains stubbornly buoyant near the 18-month highs that were established in mid-November. Dollar strength is limiting the upside in gold.

Nonetheless, the breach of the 26-Oct high at 1243.44 bodes well for additional gains to challenge the 200-day moving average at 1256.47 and the 1262.76 Fibonacci objective (50% retrace of the decline off the April high). The latter corresponds closely with the 100-week MA (1265.60 today). Further out, the 61.8% retracement level of this year’s decline at 1286.95 is looking increasingly attractive.

A close above the 200-week moving average at 1233.65 is expected today, which would lend additional credence to the bullish scenario. I’d like to see some increase in upside momentum, but that may require a breakdown in the dollar.

Silver continues to flirt with its 100-day moving average (14.63 today), with Tuesday’s high at 14.67 further bos A close above this level is needed clear the way for a retest of the key 14.92 resistance level, which is the confirmation point for the large potential double bottom pattern at 13.95/90. Tuesday’s high at 14.67 marks an additional upside barrier.

Silver however has consistently disappointed on rallies, so I remain cautious here. The gold/silver ratio remains uncooperative as well. While off the highs, the ratio refuses to truly correct, meaning silver remains weak relative to gold.

Platinum set a 12-week low on Thursday, weighed by the supply surplus, rising global growth risks and ongoing trade worries. More than 61.8% of the August to November rally has been retraced, returning considerable credence to the longer-term downtrend. Price action today remains confined to Thursday’s range.

Palladium satisfied the 1223.25 Fibonacci objective and exceeded the price of gold earlier in the week. While metal came under corrective pressure on Thursday, just over half of the losses off the midweek high at 1260.33 have already been recovered.

An inside day is apparent, but palladium still seems poised to close with a respectable 3% gain on the week. The considerable supply deficit continues to override the rise in trade and growth risks, which may ultimately negatively impact auto demand.

Short-term lease rates for palladium have surged north of 20%, suggesting that it is becoming increasingly difficult to lay hands on physical metal. We may see additional volatility, but for now I think you have to continue buying the dips.


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