Gold prices rose to a seven-week high on Tuesday to close at 1279.4 basis December futures, after U.S. economic data showed lukewarm inflation and nearly flat consumer spending, raising the question of whether the Federal Reserve will raise interest rates in the coming months. Also a measure of U.S. factory activity fell from a near three-year high in July. Today’s U.S. economic data in my view favored those who would rather see the Federal Reserve raise interest rates later rather than sooner. The key report of the week for the marketplace will be Friday’s U.S. jobs report for July from the Labor Department. The non-farm payrolls number of that report is expected to be up 180,000. If Friday’s non-farm jobs number is also a miss to the downside, it could make the Fed rethink any plans for another rate hike in 2017 or at least in the next few months. World stock markets were mostly higher Tuesday, boosted in part by upbeat corporate earnings reports and upturns in several commodity markets. The fact gold prices have performed well the past couple weeks, in the face of record highs set in the U.S. stock indexes, could bode well for the gold market longer term. However, I expect to see some back and fill ahead of key job data Friday. Unless an unforeseen geo-politcal event enters into the market, I look for December gold futures to potentially test the weekly pivot number at 1265.1 prior to the jobs report. Should this level hold look to be a buyer with a near term target at 1287.0 basis December futures. For September silver, look for a pullback to 1657.6, which is also weekly pivot. Should the selling ebb at this level, look for a rally to 1692.7. Of course both projections would benefit most from a tepid jobs number that would stymie any rally in the Dollar.
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