Want to know where gold is going next? Then you better keep a close eye on Friday's close.
Gold started Friday morning much lower. Sentiment in the gold market was bearish, after ADP, GDP, jobless claims and ISM manufacturing numbers all beat expectations within the past 48 hours.
That left all eyes on the July jobs data, which bucked the bullish trend and missed expectations. While economists had expected to see a 184,000 increase in nonfarm payrolls, the number came in at 162,000. Gold had been hugging $1,284 to $1,285.60, the prior lows, but rallied nearly $35 off of the disappointing news.
(Read more: July jobs data more gravity than 'escape velocity')
Why such a sharp reaction? Well, although the taper is certainly coming, traders and investors alike are trying to guess how soon it will arrive. With a disappointing number, the chance of a September taper drops, and gold shines a little brighter. That brought bulls and value buyers out of the woodwork.
(Read more: The four reasons why hedge funds are selling gold)
Gold reached a knee-jerk-reaction high of $1,318, hitting an area where we have identified light resistance. With the market holding support above $1,308.90 for most of the morning, we continue to look to the range of $1,296.90 to $1,340.90 for guidance.
A close above this range signals a breakout and a follow-through. But a close above $1,325 will still signal immediate-term bullish activity. And while the momentum now points higher, we must see the market close above $1,308.90 just to negate the bearish activity we saw earlier.