Gold Ends Week With Regular Session That's A Wash

Gold closed down on the day, but that loss was booked before regular trading got started. At the end of the regular shift, the metal was almost exactly where it was at the beginning. Thanks to yesterday's leap, it managed to end the first week in February with a gain of $10.20 or 0.76%.

Despite showing a sharp drop in the unemployment rate, to 9.0% which was well below the slight increase economists were expecting, the payrolls report showed only 36,000 jobs added; expectations were for a 140,000 add. The report was unusually mystifying, but the bumps were plain. The gold market took a bullish message from the report, which sparked a run up to a daily high of $1,359.70 before ending around 10:30 AM ET.

Then, the entire boost, plus a little, melted away in the next forty-five minutes. This 180-degree turn made it look as if the entire gold market had entirely changed its mind about the jobs report, or had decided that the much-anticipated numbers were just ephemera.

The subsequent action wasn't much. Gold moved sideways, with a slight upward tilt, for the rest of the session with not much fluctuation. At the end of the week, the spot price was $1,348.60: only three dollars above the level at which it had stabilized just after 11:15. The Kitco Gold Index split the $7.10 loss on the day loss into -$2.70 for predominant selling and -$4.30 for a strengthening greenback.

Gold's six-month chart, from Stockcharts.com, shows today's drop as a pullback from yesterday's leap:



$1,350 didn't end up holding, but the metal's still in a good position even after the decline. The Moving Average Convergence-Divergence lines at the bottom of the chart are definitely in a bullish configuration, adding to the picture of a slow-moving turnaround. As of now, I can't raise up too many hopes because consolidations after bull runs like last fall's tend to last months.

Turning to the greenback, the U.S. Dollar Index strangely took the jobs report as bullish after plummeting right after its release. Moving up above 78.2 by 11:00, it double-topped at that level shortly afterwards and corkscrewed into a narrowing range that had 78 as its floor. At the end of the week, it finished at 78.03.

Its own six-month chart, also from Stockcharts.com, shows how far its recent upturn has gone:



The Index has now racked up three gain days in a row; the last two have been substantial. It's now where it was back in the middle of last week. Such a springback can be explained by the extent of its fall over most of last month, but the extent of this week's upturn has put the question mark on its decline. Continuing the run up to 78.5 would make for a short-term higher high, and some reason to believe it might consolidate itself in the coming days if not weeks.

Now that the week's over, gold's in a much better position than it was in at the end of last week. There's talk of it resuming its climb rather than fear-talk about a further plummet. Last Thursday's plop might have been the seasonal low, after which the consolidation phase enters. Gold is becoming less sensitive to recovery news, and is still responsive to fears. All in all, the metal looks sanguine as it awaits the second week of February.

In closing, thanks for stopping in and reading what I've got. Let me extend my hopes for the snow tailing off to the enjoyable (or tolerable) level.