Strong January Jobs Report Leads to Market Decline and Pressure on Interest Rates.

Robust Employment Data Leads to Market Decline - S&P500 Falls 0.61%, Bond Yields Reach 3.6% on Inflation Worries

The S&P500 Index fell 0.61% in Monday's session due to the robust January 2023 jobs report, which saw employment in the US rise from 60.10% in December 2022 to 60.20% in January. The strong employment data disappointed the market's expectations for a decrease in interest rates. The job data shows a Robust economy, but it also provides the Federal Reserve with the chance to raise interest rates more assertively. For now, it appears the stock markets may continue to face headwinds from the pressure of higher interest rates.

The Nasdaq and Dow Jones both fell by 1.00% and 0.10% respectively, and the bond market experienced the sharpest action, reaching a 3.6% level not seen in nearly a month. The rise in bond yields was due to a strong labour market and a robust economy, which sparked concerns about a more assertive Federal Reserve. The ISM data added to these concerns by pointing to a strong services sector, further fuelling inflation worries and supporting the argument for more rate hikes.

Chart Action Points - US500 Daily Chart

Comments

1. The Relative Strength Index (RSI) Divergence Indicator has lost momentum and fallen below the midline support.
2. The 20, 50, and 200 Simple Moving Averages have undergone a "golden crossover" and are trending upward.

XAU/USD – Gold Prices Dip below $1880 amid Strong US Dollar and Positive Jobs Data.

Chart Action Points - US500 Daily Chart

Daily Chart Directional bias - 1 Week 

• Resistance Zone: $1920 to $1940
• Key Resistance Level: $1896
• Major Pivot Point: $1871
• Key Support Level: $1843
• Support Zone: $1815 to $1800
• 200 SMA – Green Line
• 50 SMA – Red Line
• 20 SMA – Blue Line

Chart Analysis:  

The technical outlook for gold is influenced by several key factors, including economic data releases, central bank policies, and geopolitical events. Currently, strong US jobs data is having a significant impact on gold prices, as well as other markets, by strengthening the US dollar and putting downward pressure on gold.

On February 7, 2023, gold prices fell below $1880 an ounce, reaching near their lowest levels in a month due to the overall strength of the US dollar. The positive US jobs data suggests the possibility of interest rate hikes by the Federal Reserve, which could continue to impact gold prices.

The XAUUSD pair for gold experienced a sharp drop from its recent peak of around $1958 and is now trading below the pivot point on the chart at $1871. The 20 Simple Moving Average (SMA) has moved into a resistance zone and is pointing downward, while the 50 SMA provides upward support and the 200 SMA is relatively flat and trending downward. The recent "golden crossover" of the 20, 50, and 200 SMAs helped push gold prices to new highs, but prices seem to be in a correction phase now. The Relative Strength Index (RSI) Divergence indicator has lost momentum and dropped below the midline support, displaying lower highs and lower lows.