Trading Gold Next Week: What you need to know

We know that Gold likes to throw its toys out of the pram as soon as it sees something it doesn’t like. This was observed on Monday when the commodity’s price fell sharply and without remorse following the release of the US non-farm payroll (July). Evidentially, the non-farm payroll figures outperformed even the most optimistic expectations for the data, spurring investor confidence that the US economy is firmly on a path to recovery. For interest, the non-farm payroll, measuring the number of jobs added to the US economy in June, beat estimates by seventy thousand (943K vs 870K)

Regarding the Monday in question, the ultimate drop in the price of Gold was not extraordinarily high (-1.87%). In fact, Gold dropped 2.42% the previous trading day. However, golds downwards fall, within the first H4 on Monday, exceeded 5%. It eventually retraced to close at the 61.8 daily Fib level. Yet, the damage was done for the day, and many traders were blindsided.

The aftermath

The smoke has cleared, and Gold is positioned for its next move. As of writing, Gold is priced at US $1,754.

Traders still remember when the metal was above US $1,800, which, for the most part, is where it held for two months. Gold has mounted a moderate comeback in the preceding three days, advancing 1.39% after stalling over Tuesday trading.

Fighting against this sentiment, or possibly fighting with, will be the numerous reports that will be hitting the market next week. I count thirteen reports likely to move the gold needle. Although, Focus will fall on employment and CPI figures from some of the major economies.

The Gold calendar

First up to the plate is Britain’s unemployment rate which is due on Tuesday 17 August. The unemployment rate is expected to drop from 4.8% to 4.7%, according to fxstreet. Undoubtedly, not a huge market-moving figure, but could Britain shock the market just as the US did with the non-farm payroll? Estimates since November last year haven’t deviated by more than ten basis points, so I’m not expecting Gold to take me on a wild ride in response to the release of this report.

July CPI figures dominate Wednesday 18 August. Expect releases from both the European Union and Great Britain. Following closely, Canada’s CPI figure will help kick off Thursday trading. While these CPI figures are important, the Australian Unemployment Rate will be hogging the spotlight in the BlackBull Markets office on Thursday.

Trading Gold in the lead up to the Australian Unemployment figure

Australia’s unemployment rate has been tracking down for eight months, and at last measure (June), it was at a decade low (4.9%). TradingEconomics is predicting a rise in unemployment to 5.0% as parts of Australia shut down to curb the spread of the Delta variant.

Besides Covid concerns, the positive Australian Unemployment figures have been masking a rise in underemployment for some time. Because such a dichotomy exists, I’m not hopeful that Australia has the energy to produce a surprising positive figure. I’m leaning far more toward unemployment rising to more than 5.0% for these reasons. As a commodity currency and a significant producer of Gold, maybe it would be prudent to watch for downside potential in Gold by the end of the week.