Gold recap for 05.02.2016 and the NFP outcome
And so the week ended - another one terrible for stock and the dollar. February starts again with the shadow of fear and uncertainty surrounding various past or future policy moves from the leading banks. BoE still "checks" on the poker table as FED is almost all in, but for now only raises and BoJ seems that will fold as the cards are drawn.
Yesterday we had the Non-Farm Employment Change, Average Hourly Earnings and Unemployment Rate for the U.S. at the bottom of the hour as the most anticipated news for the day - first indicators of how rising rates are affecting the economy for this moment. All day the pairs crawled in a super tight range towards this moment and... Well lets say that markets may have all ready priced in the news on Wednesday, buying the rumor and yesterday sold the fact. As this is specifically for gold I'll tell Bullion's story first. On the 15M chart, the candle at the NFP time opened at 1158.261, made a quick high towards 1162.981 when the negative NFP came out at 151K versus 189K. Another dollar selling? Yes, but not so fast, seconds after we had the wages coming in positive at 0.5% vs 0.3% and unemployment rate coming in at 4.9% vs 5.0%. Significant increase for wages and notable drop for the unemployment rate. And then the market started to digest the numbers and it liked what it calculated. Yes, NFP was disappointing, but it wasn't enough to shake the dollar again and the focus was shifted on the positive outcome for the overall labor market activity (no slack here, Yellen) and the growing hourly earnings. So gold from its high at 1162.981 dropped really fast towards 1152.915, supported by a $1.2 billion notional in gold futures dump from someone and closed at 1153.243. After that two more candles of heavy selling were charted and finally price reached 1145.245 with a fake brake out of that level and the candle pulled up supported from the bulls. One more time bullion tried to go lower, but bulls won in the end as 1147.931 hold to its ground. Then the rebound came in as investors rushed in-to gold to its safety. Gold broke trough 1162.981 and 1170 without any resistance. Price ended the day and the week at 1174.221 $/oz.
On Monday we may not see a direct attack on 1183.021, but if investors rapidly shift to gold safety, price will find itself really fast there. Direction remains bullish, good time to buy the dips. Beware of fake brake outs and rapid shift of the direction. This rally may all be fading in the end.
Have a nice weekend!