Gold, USD, Bond Yields, and stock prices are increasing.
While last week ended with a surprise, the new week starts with another surprise and confusing trades.
Gold is up on Monday morning in the Asian season while Shanghai after the Chinese New Year holidays increased more than 2%, the US futures are up by 0.2% on average, and European stocks are gaining more than 0.6% on average. This is while Gold is up by more than 0.2%, USD Index is gaining 0.1%, and US 10-years Bond Yields are up above 1.90%.
Last Friday the US non-farm payrolls showed that jobs rose by 467K in January, which is the biggest gain since October last year. According to these published data, now we have more than 19.1 million jobs returned since April 2020. The labor market now is just 1.9% lower than the pre-pandemic level, and it is very good news for the US labor market. Even though unemployment raised to 4% from the previous 3.9%, it is still can be read as positive data since the participation rate jumped to 62.2%, up from 61.9%, and the U6 unemployment rate also down to print 21-month streak decline.
Non-farm payroll numbers had two reasons to increase more thinning policies possibilities. First of all, great created jobs numbers mean that labor market improving and we can be more optimistic and slower down the supports. At the same time, average earnings increased rapidly and lift the inflation concerns. The monthly and annual rate of average hourly wages in January increased by 0.7% and 5.7%, respectively, higher than the previous value of 0.5% and 4.7% of the previous month. Higher wages can increase the final price of products and services, which directly affects consumer inflation as well.
So far, gold futures edged up 0.3% to $1,812. Gold demand is increasing with higher market risk over Us-Russia tensions, while uncertainty in the stock markets also can be another reason for Gold bulls. At the same time, US bond yields are increasing because of increasing expected inflation and it can put pressure and cap the Gold gains.
In Asia Season, Chinese data was released to show that the Caixin services purchasing managers index at 51.4 in January is weaker than last month, same as the composite PMI number at 50.1. So weaker Chinese economic data, increasing Geopolitical tensions, Hawkish BoE and ECB decisions and announcement, with pricing more on the US FED upcoming stricter policies, altogether increasing the chance of bulls in the chart, comparing with bears` chance.
From the technical point of view, as we can see in the bellow daily chart, above $1,800 market volume slowly increasing above 20 DMA. On the main chart, 20 DMA at $1,817 is the main resistance at the moment, and breathing above this level can encourage the bulls towards higher levels, especially with higher lowes that we can see clearly in the Daily chart.
