Gold price flat-lines amid pre-NFP subdued trading action, bearish bias remains

  • Gold price struggles to gain any meaningful traction and oscillates in a narrow range on Friday.
  • Reduced bets for more aggressive policy easing by the Fed seem to cap the upside for the metal.
  • Traders also seem reluctant to place aggressive bets ahead of the US monthly jobs report (NFP).

Gold price (XAU/USD) extends its sideways consolidative price move for the second successive day and oscillates below the $2,050 level through the early European session on Friday. Traders now seem reluctant to place aggressive directional bets and prefer to wait for the release of the official US monthly employment details. The crucial US Nonfarm Payrolls (NFP) report could offer some cues about the Federal Reserve's (Fed) interest rate path, which, in turn, will provide a fresh directional impetus to the non-yielding yellow metal. 

In the meantime, investors continue to scale back their expectations for more aggressive policy easing by the Fed in the wake of the upbeat US labor market reports released on Thursday. This is reinforced by elevated US Treasury bond yields, which allow the US Dollar (USD) to stand tall near a three-week high and cap the Gold price. That said, concerns about a slow economic recovery in China, along with geopolitical risks, lend some support to the safe-haven precious metal. Nevertheless, the XAU/USD remains well within the striking distance of a one-and-half-week low touched on Wednesday and seems poised to post losses for the first time in the previous four weeks. 

Daily Digest Market Movers: Gold price awaits fresh catalyst before the next leg of a directional move

  • Geopolitical risks, along with China's economic woes, continue to weigh on investors' sentiment and offer some support to the safe-haven Gold price on Friday.
  • The benchmark 10-year US Treasury yield holds steady near 4.0% amid reduced bets for multiple rate cuts by the Federal Reserve and caps the XAU/USD.
  • Traders trimmed expectations on the number of rate cuts by the Fed in 2024 to four from six on Wednesday following the release of the upbeat US macro data.
  • The Automatic Data Processing (ADP) reported on Thursday that US private-sector employers added 164K jobs in December as against 115K expected.
  • Adding to this, a report published by the US Department of Labor (DOL) showed that Weekly Jobless Claims fell more than expected, to 202K last week.
  • The US Dollar bulls, meanwhile, seem reluctant to place aggressive bets and prefer to wait for the release of the closely-watched official US monthly jobs data.
  • The popularly known Nonfarm Payrolls (NFP) report is expected to show that the economy added  170K new jobs in December vs 199K in the previous month.
  • The unemployment rate is anticipated to edge higher to 3.8% from 3.7%, while Average Hourly Earnings growth is seen easing to 3.9% YoY rate from 4.0% in November.
  • The crucial employment figures could guide the Fed's near-term policy outlook, which will influence the USD and provide a fresh impetus to the non-yielding metal.

Technical Analysis: Gold price remains stuck in a two-day-old trading range, not out of the woods yets

From a technical perspective, any subsequent move up might continue to confront stiff resistance near the $2,050-$2,048 region. The said area should now act as a key pivotal point for intraday traders, which if cleared should lift the Gold price to the next relevant hurdle near the $2,064-2,065 zone. Given that oscillators on the daily chart are still holding in the positive territory, the upward trajectory could get extended further towards the $2,077 region en route to the $2,100 round figure.

On the flip side, the weekly swing low, around the $2,030 zone, seems to protect the immediate downside. This is followed by the 50-day Simple Moving Average (SMA), currently around the $2,011-2,010 region, and the $2,000 psychological mark. A convincing break below the latter will be seen as a fresh trigger for bearish traders and set the stage for the resumption of the downtrend witnessed over the past week or so.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.

USD   1.03% 0.37% 0.84% 1.62% 2.70% 1.44% 1.14%
EUR -0.89%   -0.50% -0.05% 0.75% 1.69% 0.56% 0.19%
GBP -0.38% 0.50%   0.48% 1.25% 2.41% 1.06% 0.69%
CAD -0.85% 0.02% -0.29%   0.77% 1.87% 0.59% 0.24%
AUD -1.65% -0.76% -1.26% -0.80%   0.92% -0.20% -0.55%
JPY -2.76% -1.71% -2.32% -1.69% -0.93%   -1.13% -1.68%
NZD -1.46% -0.56% -1.07% -0.61% 0.19% 1.10%   -0.36%
CHF -1.07% -0.18% -0.68% -0.21% 0.58% 1.63% 0.39%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Economic Indicator

United States Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews ​and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Read more.

Next release: 01/05/2024 13:30:00 GMT

Frequency: Monthly

Source: US Bureau of Labor Statistics

Why it matters to traders

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

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