Jump to content

Gold Prices Fall as Yields Rise, S&P 500, Nasdaq 100 Pull Back After NFP

Recommended Posts


  • This morning brought the release of Non-farm Payrolls for the month of May.
  • This is the final NFP report that the Fed will see before the June rate decision, where the bank is widely-expected to hike by 50 basis points. Perhaps more pressing, however, is the context of that hike, with the Fed’s plans for Quantitative Tightening and the Summary of Economic Projections set to be released at that rate decision.
  • The big item on next week’s economic calendar out of the United States is the release of inflation data on Friday at 8:30 AM ET.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

Chemical and Physical Properties of Gold

This morning brought a strong headline number for the May NFP report. While the headline number put in a strong beat (390k v/s 325k expected), the unemployment rate remained at 3.6% which was just above the 3.5% expectation. Perhaps more importantly, the inflation component of the report showed a month-on-month gain .3% v/s the .4% expected, and that’s in-line with last month’s .3% print.

The initial result was a quick pop of USD strength which has been mostly faded about an hour after the release. And in a related move, Treasury yields bumped-higher with the 10 year coming close to another test at the 3% marker before similarly pulling back. And it’s that theme in yields that’s had a pull on a number of other markets of late, equities included.

The 10-year note set a fresh three-year-high at 3.167% on May 9th, as a big spot of longer-term resistance came into play.


TNX monthly chart

Chart prepared by James Stanley; TNX on Tradingview

After that fresh high on May 9th, yields pulled back for the next two-plus weeks, falling back down to a low of 2.708% that was hit twice, on May 25th and May 27th. That’s a -14.46% move in two weeks in one of the most important asset classes in the world; a strong show of volatility that highlights some of the tension that’s under-the-surface.


TNX daily chart

Chart prepared by James Stanley; TNX on Tradingview

This morning saw yields on the 10-year push back up towards the 3% marker, which is an important psychological level. And as yields have been rising this week, helped along by a number of Fed-speakers talking up the prospect of even more rate hikes, pressure has started to reappear in stocks.

As I wrote last night, there remain a number of bearish factors stacking up for stocks. And this week wasn’t encouraging on the matter as there’ve been some pointed comments from some noteworthy individuals opining on the matter. Jamie Dimon said this week that he saw an ‘economic hurricane’ on the horizon. This is the leader of one of the most important banks in the world and this is not a man known for hyperbole. But, perhaps more telling, if the head of one of the largest banks in the world is preparing for storm clouds ahead, much less a hurricane, that means a reigning-in of spending, which further exacerbates the slowing of capital in the economy.

And then last night, Elon Musk fired off another email to his employees, saying he has a ‘super bad feeling’ about the economy and would need to lay off 10% of his workforce.

Collectively, this has started to stack up to more and more pressure on equities. The resistance zone on the S&P 500 looked at yesterday has held a second inflection, and prices are now tilting below short-term support at 4147. The next spot of support on my chart is around the 4100 level, with 4062 below that followed by a major spot at the 4,000 psychological level.


Please add a description for the image.

Chart prepared by James Stanley; S&P 500 on Tradingview

The Nasdaq 100 was in a similar spot, re-testing a key zone of resistance that had displayed some previous support. The difference here, however, is slight but important. While the S&P 500 held below that prior swing-high, the Nasdaq 100 actually budged above that prior higher, which can keep the door open for some short-term bullish potential, particularly if buyers can defend support above the 12,465 level that was in-play earlier this week on all of Tuesday, Wednesday and Thursday.

If/when that zone gives, the breach could be sizable but, so far, it’s held three inflections. If buyers are able to pose a bump up to a fresh high, there’s deeper resistance at the 13,000 psychological level and that could be of interest for fade plays.


Nasdaq 100 two hour chart

Chart prepared by James Stanley; Nasdaq 100 on Tradingview


Gold put in an initial bearish move on the NFP print but such as we’re seeing with the US Dollar, that move has already been mostly faded-out. So, at this point the focus moves to next week and the bigger picture setup.

As yields started pulling back last month, buyers returned to Gold. And prices put in a very respectable run of more than $100 from the May low up to the recent June high. But, that June high printed at a key spot of resistance, taken from the 50% marker derived from the Fibonacci retracement spanning the move from last August’s low up to the March high. That level plots at 1878.40 and it came into play overnight, leading to a move back below 1860 on the heels of NFP.

I remain bearish here, but the near-term trend of strength needs to show greater potential for reversal before that short-side theme becomes attractive again. The next key spot of resistance on my chart is in the zone spanning from 1888-1891, and above that is a major long-term zone that runs from 1900-1920. I would want to see buyers push above 1925 before abandoning the bearish bias.


gold four hour price chart

Chart prepared by James Stanley; Gold on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com. 3rd June 2022

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 03/06/23 20:25
  • Posts

    • I don't know but it looks like a really awesome service Because I have come across all sorts of mixers in my work  
    • Charting the Markets: 2 June Indices rally as US agrees debt ceiling bill. EUR/USD, GBP/USD rally while EUR/GBP stabilises as US debt ceiling bill is passed. And WTI recoups recent losses while gold, silver on track for first weekly advance. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 02 June 2023               This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
    • It was a blockbuster number yesterday for the ADP private payrolls, showing 278,000 jobs opened in May, while forecasts had been for 170,000.  Jeremy Naylor | Analyst, London | Publication date: Friday 02 June 2023 IGTV’s Jeremy Naylor suggests a similar upside surprise could see almost 300,000 jobs created under the non-farm payroll count with estimates for 190,000 job creations. The unemployment rate is seen rising one notch to 3.5%. (Video Transcript) NPFs: what to expect Could yesterday's strong private payrolls number from the ADP reading give us an insight into the potential upside risk to today's non-farm payrolls? That report from ADP yesterday showed 278,000 jobs opened in May - forecasts had been for 170,000. Now the NFP expectations, 190,000 job creations are forecast for the month of May proportionately using that ADP surprise. That would mean an upside reading for NFPs close to 300,000. Why the increase? Now, the unemployment rate is seen rising one notch to 3.5%. Why is that rising? When you've got that rise in the number of job creations, the unemployment rate is not taking the same data that the jobs numbers themselves are being produced from average hourly earnings. We're looking there for that to go up 0.3% month-on-month, 4.4% year-on-year, still below the rate of inflation. Now, this chart shows the unemployment rate back to pre-Covid-19 levels. It's clear that jobs have been created at an appreciable rate and this alongside a relatively strong GDP number and inflation coming down, there may yet be a soft landing for the US economy. But if the Federal Reserve (Fed) does continue to raise rates, things may get a little bit more sticky for the economy and a little bit more difficult to predict. This is a comparison of fed funds rates and US consumer price inflation (CPI) since January 2021. So you can see here the rate at which the US central bank has been piling the pressure on the monetary markets with that rise to five and a quarter percent. And at the same time, the CPI number is coming down, which is a good thing, but it's still not down to the 2% level, 4.9% is a long way away still from the 2% target. So the Fed is entitled still to have an excuse to raise interest rates. US dollar basket Let's take a look at what's been happening with the US dollar basket. Yesterday, we saw a pullback coming through as we saw money going into risk assets because of that rubber stamping from the Senate or the vote in the Senate to approve the budget that's now gone for the presidential seal. EUR/USD And we've seen a second day in a row of losses or the euro for the dollar basket as far as the euro/dollar is concerned, bouncing away from that 76.4% retracement. And I think now, you will have been stopped out if you were short on this, you would have been stopped out on this and hopefully you would have got some profits on the way down. So that's where things are ahead of non-farm payrolls out today at 13:30 UK time. And we will be live on the IG platform at 13:25 today.
  • Create New...