Weaker Payrolls Dampen Rate Outlook, Support Gold Demand

The SPDR Gold Trust ETF (NYSE:GLD) and iShares Silver Trust ETF (NYSE:SLV) closed Friday with the best gains of the week, as weaker than expected payrolls numbers out of the U.S. supported safe haven demand for precious metals assets.

In the current climate, a moderating headline number in the non-farm payrolls and an uptick in the unemployment rate become more significant, as it becomes harder for the Federal Reserve to maintain its schedule for raising interest rates next year.

GLD and SLV are both trading at the upper end of their recent ranges, showing additional gains when negative geopolitical headlines become more of a focus in the financial media.

The PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP) has also posted gains during these sessions, which suggests that the recent move is broad based and that any increased evidence of global uncertainty will weigh inversely on assets like stocks and high yielding currencies.

The SPDR S&P 500 Trust ETF (NYSE:SPY) has been trading within striking distance of the 2,000 mark for most of the summer, so there is good potential for these trends to build if short-term equities investors start to take profits while prices are still elevated.

This could continue to be the central theme this week in precious metals prices if traders do not see more optimistic news headlines that take some of the attention away from elements of uncertainty in areas like Ukraine.

Chart Perspective: GLD

(Chart Source: CornerTrader)

Shorter-term daily charts in GLD suggest that prices have stabilized in the mid-120s, but when we pull out to show the broader perspective, things start to look less encouraging.

Traders are still well below the 2011 peak and the lower highs from 2012 help confirm the bearish trajectory of the ETF. Critical support now rests at 115.