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After a 18 day delay the much anticipated U.S non-farm payrolls and unemployment number was released this morning. It was a mixed bag. September non-farm payrolls grew by 148,000, well below the 182,000 forecast. The August number was revised upwards to 193,000 from 169,000. The unemployment rate came in at 7.2 percent.
The yellow metal propelled itself higher after the release of the data, but let's note that the market had started to rally well before the numbers were released. The metal opened at $1314, then pushed higher to $1320 and when the numbers were "officially" published the metal jumped to $1335, a key resistance level. Gold prices should be supported as with the government shutdown and the data being delayed. It will be hard for the Federal open market committee to get an accurate reading on how the economy is growing. Fed has linked interest rates and its stimulus programme to economic targets. The non-farm unemployment rate will have to drop to 6.5% before the Fed moves rates up from the current low level of 0-0.25%.
Gold is has finally broken resistance at $1325 and $1335, it now sets its sights on $1375 the September 18th high, a mark achieved when the feds announced they will not taper. The metals markets should remain well bid to the end of the year. Federal Reserve Bank of Chicago President Charles Evans, an advocate of monetary stimulus, said yesterday in a CNBC interview that "fiscal strife in Washington will probably delay the central bank’s tapering of its monthly bond purchases". The Fed on Sept. 18 maintained the pace of buying.
Spot silver broke through $22.30, now looking to test $23.00 level. Spot silver goes as gold goes. The bigger brother gold remains well bid so expect the grey metal to also be well bid. Expect resistance levels to be just that with lots of selling around those levels.
The gold silver ratio remains firmly entrenched in its own range. While the ratio looks bearish (silver to outperform gold) the key level to watch on the downside is 57.86 a break of this level could open up retracement back to 56.13.
A higher close on a weekly basis for gold and silver should bring in more buying. Last week gold closed at $1314 and silver at $21.87. We are well above those levels, but we still have two days of trading ahead. Markets are now focused on the weekly jobless claims (Thursday) and the feds next policy meeting October 30th.
Support $1325/$1330 $23.20/$23.41
Resistance $1350/$1370 $22.00/$22.50
October 22nd Closing Prices