Gold trading outlook: futures rise second day on lower U.S. non-farm payrolls

Gold remains under a key technical level after a strong increase on Friday as U.S. non-farm payrolls came in weaker than expected.

Comex gold for delivery in December traded at $1 170.9 per troy ounce at 7:27 GMT, up 0.09% on the day. On Friday the precious metal fell to $1 130.4, its lowest since April 2010, but managed to rebound and finish the session with a 2.38% gain, its biggest one-day increase in five months.

Gold is traded beneath the key level of $1 180 and the resistance is likely to push prices back to the 4-1/2 year low touched last week as the dollar remained strong amid caution related to speculations of an upcoming interest rate increase by the U.S. Federal Reserve.

The precious metal benefited from lower-than-expected U.S. non-farm payrolls in October, which increased by 214 000, down from the projection of 231 000, boosting golds appeal as a hedge. However, the unemployment rate reached a new six-year low of 5.8%, capping gains.

“The rally on Friday may well be overdone as investors mull over the U.S. data and realize the jobs data actually wasnt all that bad,” said Sam Laughlin, a metals dealer at MKS Group. “We are looking towards resistance around $1,180-85 while support will be sitting around Fridays low print of $1,130.”

Analysts and traders surveyed by Reuters predicted that gold prices could fall to $1 000 by the end of the year for the first time since 2009. However, lack of key U.S. data during this week may push prices higher, but they are not expected to breach $1 185.

The US dollar index for settlement in December stood at 87.490 at 7:39 GMT, down 0.27% on the day. On Friday the US currency gauge lost 0.46% and closed at 87.726, having earlier risen to 88.315, the highest since June 2010.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP and a proxy for investor sentiment towards gold, lost 5.68 tons on Friday and reached 727.15, its lowest since September 2008.

Pivot Points

According to Binary Tribune’s daily analysis, December gold’s central pivot point on the Comex stands $1 159.7. If the contract breaks its first resistance level at $1 189.1, next barrier will be at $1 208.3. In case the second key resistance is broken, the precious metal may attempt to advance to $1 237.7.

If the contract manages to breach the S1 level at $1 140.5, it will next see support at $1 111.1. With this second key support broken, movement to the downside may extend to $1 091.9.