Payroll Statistics Below Expectations? Here We Go Again!

How can you tell that gold price and gold stocks really don’t want to rally? Easy, just focus on what gold “has to” do AND on what happens next.

Friday was the day when the nonfarm payroll statistics were released, and once again, they were below expectations. As you can see in the table (from below, this is usually not the case.

Payroll Statistics Below Expectations? Here We Go Again! - Image 1

There were only a couple of times in the recent past when the jobs report was reported below expectations. And in each case, there was a very specific follow-up in mining stocks. I marked it using the red vertical lines on the below GDXJ ETF chart.

Payroll Statistics Below Expectations? Here We Go Again! - Image 2

In each previous case (since April 2022), the same thing happened after disappointing nonfarm payrolls.

On July 13, I wrote about it in the following way:

  • “But PR, miners rallied, what can possibly be bearish about it?”

Remember the red, vertical lines that I placed on the above chart to show the recent analogy? Those were the moments when the nonfarm payrolls came out below expectations. Both previous cases marked the key yearly tops.


The thing is that top didn’t form exactly when the jobs report was released, but after a quick run-up that followed. Consequently, the fact that we saw a quick run-up this week is not something that invalidates this bearish (!) analogy – it’s something that fits right into it.

Besides, due to yesterday’s upswing, junior miners moved back to their rising resistance line (previous support) without breaking above it. It means that the GDXJ price currently verifies the breakdown below this level.

Given gold’s weakness, its proximity to the 50-day moving average, and – most importantly – how likely the USD Index is to reverse very soon, it seems that this breakdown in the GDXJ will be verified shortly, and this, in turn, means that the powerful medium-term decline is likely to be resumed very soon as well.

This creates great trading opportunities, not only in mining stocks but also in other markets. It’s not easy to take decisions against the emotional reactions of other market participants – congratulations on staying strong!

Remember, a rally doesn’t have to be bullish, and a decline doesn’t have to be bearish. In fact, tops can only form after rallies, and bottoms can only form after declines. Please keep that in mind the next time when you “feel” the urge to follow the current sentiment just because it “feels” like a good idea. It’s best to analyze the situation first and only then take action – skipping this step tends to be costly.

Indeed, after the statistics-based rally, we saw a top verification of the previous breakdown, and then the decline continued.

We saw the same kind of indication once again, and we once again saw a daily rally. But does it mean that we’ll see more strength in the very near term?


The thing is that this time, the markets were not surprised to the same extent. Previously, the nonfarm payrolls were almost 18% below expectations. Last Friday, they were only 6.5% below expectations. And we already saw a rally – an intraday one.

This doesn’t mean that GDXJ “certainly” won’t go higher here. In fact, if the rally was to be about one-third of the previous rally (just as the surprise this time was about one-third of what it was last month), then we could still see a move to $37 or so.


  1. This potential move higher is rather tiny – too small for any trading adjustments to seem justified from the risk-to-reward point of view.
  2. Gold already indicates that it wants to move lower here.

At the beginning of today’s analysis, I emphasized that it’s important to notice not just what does as an obvious reaction to a given piece of news is, but to also notice the immediate follow-up. The latter is even more interesting because it shows what the market participants really think.

At first, if a piece of unexpected news hits the market, the latter is forced to react to adjust to the surprise. So, whatever happens, is not really informative because it “had to” happen.

Lower-than-expected payroll statistics imply a weaker economy, which implies that Fed might make a dovish U-turn. Of course, this is without considering that the demand would have to really fall first in order to really curb inflation. Either way, the market viewed this as something bullish for gold and silver. At least initially.

What happens next is what “didn’t have to” happen, and therefore it shows the market’s true intentions.

Payroll Statistics Below Expectations? Here We Go Again! - Image 3

Gold and silver both moved higher in the immediate aftermath of the news release, but… Everything moved back to the pre-release trading range shortly thereafter – just as if nothing had happened.

The GDXJ ETF moved higher after the opening bell, but it then reversed and declined below the opening price and closing there, thus creating a bearish intraday reversal.

Payroll Statistics Below Expectations? Here We Go Again! - Image 4

Zooming in shows that the GDXJ simply moved back to the previous intraday lows and then moved back down. This is something that is a completely normal phenomenon during bigger declines. I marked two previous cases when we saw something like that with green lines.

And let’s keep in mind that the above reflects only Friday’s session – it doesn’t take into account today’s pre-market decline in gold price. Consequently, the real implications are even more bearish.

So, while the nonfarm payroll statistics were once again surprisingly low, it seems that the real implications are bearish despite the immediate-term effect that triggered a quick run-up. Just like what I wrote, the true bearish nature of this event became true last month, and we’re likely to see even more bearish action this month.

I congratulated you on not being caught by the emotional rally last month, and I think that congratulations are due also this time. Friday’s rally was small, but some traders that focus on news only and act on it without digging deeper probably reacted in a way that they will ultimately be happy with. You stayed strong – congratulations.

And yes, all this means that the huge profits that we recently reaped in the FCX are likely to be joined by massive profits from the current short positions in the junior mining stocks and in the FCX. Stay tuned!

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Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief