Gold tests recent lows as US Payrolls data cool hopes of Fed cuts


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  • Gold pulls lower as US Nonfarm Payrolls increase above expectations in November.
  • The Precious metal is testing recent lows amid a stronger US Dollar.
  • Higher US yields are expected to support the Dollar and weigh on Gold.

Gold price (XAU/USD) has been pulled lower ahead of Friday's American session opening, as the US Nonfarm Payrolls (NFP) report, beat expectations, which has cooled investors' hopes that the Federal Reserve (FED) might stsar cutting rates ahead of schedule.

Nonfarm employment increased in the US In November with 199,000 new jobs, following a 150,000 increase in October, and beating market expectations of a 180,000 reading. Beyond that, wage inflation accelerated at a 0.4% pace, from the 0.2% seen last month.

These figures offset the impact of the US JOLT’s openings and the ADP employment report seen earlier this week and cast doubt about the possibility that the Fed starts rolling back its tightening cycle in March. According to the CME Group Fed Watch tool, chances of a 25 bps cut in March have declined below the 50% level from 55% ahead of the data release.

This is providing a fresh impulse to US Treasury yields and dragging the US Dollar higher. In a short while, the University of Michigan Consumer Sentiment Index is expected to have shown a moderate improvement, which might give a fresh boost to the USD.

Beyond that, the ongoing uncertainty about China and the escalating tensions in the Middle East have provided additional support to the safe-haven Greenback. 

Daily Digest Market Movers: Strong US employment data sends the US Dollar higher and weighs on Gold

  • Gold prices are testing support at the $2,000 level after better-than-expected US Nonfarm Payrolls data.
     
  • The US economy has created 199K jobs in November, up from 150K in the previous month and beyond market expectations of 180K.
     
  • Wage inflation increased at a 0.4% pace in November, twice as fast as in October, beating expectations of a 0.3% rise.
     
  • US Payrolls data offsets concerns that the US labor market is losing momentum, which has boosted speculation about a dovish turn in the Fed’s monetary policy outlook.
     
  • The CME group's FedWatch Tool shows a 99% chance that the Fed will stand pat at next week’s meeting but bets for a rate cut in March have fallen below the 50% level.
     
  • The focus is now on the University of Michigan Consumer Sentiment Index, which is expected to have improved in December and might give a fresh push to the USD.


Technical Analysis: Gold prices approach key support area at $ 2,000 after upbeat US employment data


Gold pices are losing ground against a stronger US Dollar following the release of the US Nonfarm Payrolls report, with the precious metal extending its reversal below the bottom of the recent trading range and nearing the key $2,000 support area.

A confirmation below $2,000 would negate the longer-term upside bias and confirm a Head and Shoulders pattern, often a sign of a trend change, giving bears fresh hopes. Below the $2,00 level, the next targets would be $1,970 and $1,932.

On the upside, immediate resistance remains at $2,040, which is closing the way towards $2,067 and the all-time high, at $2,150.

(This story was corrected on December 11 at 07:17 GMT to say that Gold price pulled back ahead of the American trading session, not European.)

US Dollar price today

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

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.46% 0.59% 0.02% 0.43% 0.15% 0.80% 0.52%
EUR -0.46%   0.14% -0.43% -0.04% -0.31% 0.33% 0.07%
GBP -0.59% -0.14%   -0.58% -0.17% -0.44% 0.20% -0.07%
CAD -0.02% 0.43% 0.58%   0.40% 0.14% 0.77% 0.50%
AUD -0.42% 0.05% 0.19% -0.39%   -0.27% 0.39% 0.12%
JPY -0.14% 0.31% 0.45% -0.13% 0.26%   0.68% 0.37%
NZD -0.79% -0.36% -0.20% -0.77% -0.37% -0.64%   -0.30%
CHF -0.51% -0.07% 0.07% -0.51% -0.10% -0.37% 0.26%  

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 Michigan Consumer Sentiment Index

The Michigan Consumer Sentiment Index, released on a monthly basis by the University of Michigan, is a survey gauging sentiment among consumers in the United States. The questions cover three broad areas: personal finances, business conditions and buying conditions. The data shows a picture of whether or not consumers are willing to spend money, a key factor as consumer spending is a major driver of the US economy. The University of Michigan survey has proven to be an accurate indicator of the future course of the US economy. The survey publishes a preliminary, mid-month reading and a final print at the end of the month. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Read more.

Next release: 12/08/2023 15:00:00 GMT

Frequency: Monthly

Source: University of Michigan

Why it matters to traders

Consumer exuberance can translate into greater spending and faster economic growth, implying a stronger labor market and a potential pick-up in inflation, helping turn the Fed hawkish. This survey’s popularity among analysts (mentioned more frequently than CB Consumer Confidence) is justified because the data here includes interviews conducted up to a day or two before the official release, making it a timely measure of consumer mood, but foremost because it gauges consumer attitudes on financial and income situations. Actual figures beating consensus tend to be USD bullish.

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