08:44, 05 November

Struggling with Resistance at $1240 as Solid Jobs Doesn’t Help

Gold continues to struggle with resistance at the $1240 level despite rallying strongly again towards the end of last week. It fell away from that level throughout the first half of last week after yet again attempting to push higher through the $1240 level. It did however move to a four month high just above $1240 before being sold off again. It enjoyed a period of consolidation for almost two weeks after surging higher a few weeks ago, after being content to trade right around the key $1200 level for an extended period. It has received both support and resistance from this level in the last couple of months and didn’t appear to be in any rush to move too far away. The $1240 level was significant several months ago when gold received some short-term support there and subsequent resistance, and yet again it has struggled with this.


Given the amount of time that gold consolidated around the $1200 level, it wouldn’t surprise anyone if it continued to do that should gold ease lower from its recent surge higher. Throughout the second half of June gold dropped sharply to fall to a then low for 2018 below $1240 before being propped up at this level. The key level of $1240 had been a steady rock of support in the last 12 months for gold so it is likely to offer some reasonable selling should it continue to rally higher.

After falling for several years up until the end of 2015, which saw it fall from its all-time highs down to around $1050, gold has done well in the last few years to regain some of those losses, although it is really returning the gains in the last few months. It had climbed back above $1300 on several occasions since then and generally in the last 15 months it had been steadily climbing higher from around $1100.

The U.S. Bureau of Labor Statistics reported that total non-farm payroll employment rose by 250,000 in October, leaving the unemployment rate unchanged at 3.7%, beating expectations and resulting in a record number of employed people.The largest gains were seen in health care, manufacturing, construction, transportation and warehousing.The government also stated that Hurricane Michael had no discernible effect on the national employment and unemployment estimates for October.This latest jobs data comes on the back of a month when U.S. stocks were sold off strongly.The strong jobs data also boosted the U.S. dollar, which then put some pressure on gold. The data remaining strong despite storm-related disruptions, suggests the economy is moving along strongly and that the Fed will continue on their path of raising interest rates.The U.S. Federal Reserve has raised interest rates three times this year and is widely expected to raise rates again in December.Gold is sensitive to higher U.S. interest rates, and the return of risk appetite could be a bearish sign for gold, given how it's benefited from its safe-haven status recently.Attention is now turning to the U.S. congressional elections on Tuesday 6th November, which will determine whether the Republican or Democratic party controls Congress.