Inflation Good for Gold

January 6, 2017 9:24AM CST

In the early morning trade, February gold is trading $6 lower and currently at $1175.0. Monthly non-farm payroll rose to a lower-than-expected 156,000 in December, but a revision to the two prior months added a net of 19,000 more jobs. However, the big story is another 0.4 percent rise in average hourly earnings - the second such gain in three months. With that positive data in the report, it brought gold to its highs. This number can also be seen as a positive sign for gold in the long term, because it’s widely viewed as feeding an overall rise in inflation.

If we take a quick look at the technicals, you’ll clearly see that gold broke above a bearish trend line and is trading above its 20-day moving average. With some signs of real inflation, look for gold to test it's 50-day moving average that currently comes in at $1200.0 an ounce and if momentum becomes very strong, look for a rally up to its 200-day moving average that currently comes in at $1274.9. Below is a daily February gold chart with all the technical levels from this article. 

 

Gold Daily

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