Gold Price Trends Amid US Jobs Data Anticipation
Gold prices are extending their trading range into the fourth consecutive day on Friday as investors exercise caution ahead of the highly anticipated US Non-Farm Payrolls (NFP) data scheduled for later in the day.
The US NFP report could provide fresh impetus for gold prices. Currently, gold is oscillating without clear direction as traders refrain from making new bets on the US Dollar (USD) ahead of crucial US employment data. The USD is nursing wounds after a sharp decline, notably against the Japanese Yen. The USD/JPY pair dropped over 500 pips on Thursday, pushing the exchange rate to a new 4-month low of 141.63. Market participants hope for an earlier-than-expected policy adjustment by the Bank of Japan (BoJ).
Despite the USD sell-off, gold prices are not benefiting, as US Treasury bond yields recover strongly from multi-month lows. This diminishes the appeal of non-interest-bearing gold. Markets are repositioning in US government bonds and the USD as they seek to lock in profits ahead of the Federal Reserve's (Fed) interest rate decision next week.
Meanwhile, the eagerly awaited US labor market data is under scrutiny for new clues regarding the Fed's interest rate outlook. The market is pricing in around a 60% chance of a rate cut in March. The NFP data is expected to reveal an addition of 180,000 jobs in November, compared to the previous job growth of 150,000. Average hourly earnings, a measure of wage inflation, are predicted to rise by 4.0% YoY in November.
The latest US ADP employment and JOLTS data indicate loosening labor market conditions. If the weak US NFP print confirms this trend, expectations for a Fed rate cut could surge, undermining the USD and US Treasury bond yields. In such a scenario, gold prices may sustainably reclaim the $2,050 barrier. Conversely, if the data significantly exceeds expectations, the market could use it as a reason to take profits ahead of the Fed's decision, and gold price adjustments may continue toward the $2,000 level.
The US NFP report could provide fresh impetus for gold prices. Currently, gold is oscillating without clear direction as traders refrain from making new bets on the US Dollar (USD) ahead of crucial US employment data. The USD is nursing wounds after a sharp decline, notably against the Japanese Yen. The USD/JPY pair dropped over 500 pips on Thursday, pushing the exchange rate to a new 4-month low of 141.63. Market participants hope for an earlier-than-expected policy adjustment by the Bank of Japan (BoJ).
Despite the USD sell-off, gold prices are not benefiting, as US Treasury bond yields recover strongly from multi-month lows. This diminishes the appeal of non-interest-bearing gold. Markets are repositioning in US government bonds and the USD as they seek to lock in profits ahead of the Federal Reserve's (Fed) interest rate decision next week.
Meanwhile, the eagerly awaited US labor market data is under scrutiny for new clues regarding the Fed's interest rate outlook. The market is pricing in around a 60% chance of a rate cut in March. The NFP data is expected to reveal an addition of 180,000 jobs in November, compared to the previous job growth of 150,000. Average hourly earnings, a measure of wage inflation, are predicted to rise by 4.0% YoY in November.
The latest US ADP employment and JOLTS data indicate loosening labor market conditions. If the weak US NFP print confirms this trend, expectations for a Fed rate cut could surge, undermining the USD and US Treasury bond yields. In such a scenario, gold prices may sustainably reclaim the $2,050 barrier. Conversely, if the data significantly exceeds expectations, the market could use it as a reason to take profits ahead of the Fed's decision, and gold price adjustments may continue toward the $2,000 level.
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