By Stewart Thomson
1. Gold has a rough general tendency to decline ahead of the monthly US jobs report, gyrate wildly when the report is released, and then rally modestly higher for another one to three weeks. The cycle tends to repeat itself with varying degrees of intensity.
2. Please click here now. Double click to enlarge this daily bars gold chart.
3. It’s clear that gold responded to the latest jobs report in “textbook” fashion. I suggested gold would decline to about $1310 ahead of the jobs report. It went to about $1306.
4. Since then, gold has rallied to about $1335 and the technical situation is now very good. Note the 14,7,7 series Stochastics oscillator at the bottom of the chart. There’s a crossover buy signal in play.
5. Even though Indian demand is currently soft, gold is very well supported by institutional money managers. At this point in time, it could be persuasively argued that neither the love trade nor the fear trade are the prime movers of the gold price.
6. Instead, gold is being supported by the “competitive cost of carry” trade. Low rates and negative rates on most fiat currencies make gold very attractive as a currency.