On Friday, both silver and gold advanced, with gold climbing again above its 200-day moving average, trading near 1,810 USD during the US session.
Solid jobs market
All focus today was on the US jobs report for January, which showed the economy created 467,000 new jobs in that month, three times the consensus of 150,000. However, the number was a 3-sigma beat, suggesting that the consensus was wrong. In fact, the actual result came in at double the highest forecast.
Additionally, the BLS also revised December payrolls from 199,000 to 510,000. Lastly, as part of the BLS’s annual revisions, November was revised from 249,000 to 647,000. This means that the previous two months’ revisions were 709,000 higher, putting the monthly average to about 500,000, nearly the same as before the pandemic.
The unemployment rate rose marginally from 3.9% to 4.0%, worse than 3.9% expected. The participation rate also increased, rising from 61.9% to 62.2%.
Finally, average hourly earnings (wage growth) jumped more than forecast, printing 0.7% monthly (more than 0.5% consensus) and 5.7% yearly, smashing expectations of 5.2%. That fast the fastest yearly increase since May 2020.
The bottom line comes from Dennis DeBusschere, founder of 22V Research: “Net-net, labor market is super strong, the Fed still has to tighten, and March rate hike expectations have gaped higher.”
Following the data, US yields literally exploded higher, with the 10-year yield soaring to 1.9%, where the critical resistance is spotted. It is the highest level since January 2020. At the same time, the 2-year yield rocketed to 1.3%; the threshold was last reached in February 2020.
The market is slowly leaning towards a 50-bps rate hike in March, while four additional rate hikes this year are currently priced in.
Technical situation seems neutral for now
One would expect a sharp decline in precious metals following such a strong employment report and soaring yields. However, the exact opposite has happened, and both silver and gold were trading higher on the day (at the time of writing).
For now, gold remains stuck in limbo as the metal has not moved anywhere over the previous months. The 200-day average near 1,808 USD continues to be a magnet for the metal.
However, it looks like a triple bottom pattern with support near 1,780 USD, which can send gold above November highs of 1,865 USD. Although it is hard to imagine gold rallying, considering the high yields and strong USD.