Sideways Action In Gold, U.S. Non Farm Payrolls Preview

Posted Thursday, October 4, 2018 by
Shain Vernier • 2 min read

It has been a rocky Thursday session on the U.S. markets. Equities are getting slammed, led by losses in the DJIA, S&P 500, and the NASDAQ. Commodities are off, with WTI crude posting a $1.50 intraday loss. There are still a few hours left, but it appears that the USD, gold, oil, and stocks are headed for a negative close.

U.S. Non Farm Payrolls (NFP) Preview

Friday brings the U.S. jobs report, featuring Non Farm Payrolls. Here is a look at the expectations for tomorrow’s release:

Event                                                           Previous        Projections

Average Hourly Earnings (YoY, Sep)             2.9%                  2.8%

Non Farm Payrolls (Sep)                                  201K                185K

Unemployment Rate (Sep)                               3.9%                3.8%

Trade Balance (Aug)                                        -$50.1B          $-53.5B

The key number to watch is the Unemployment Rate for September. Consensus estimates have U.S. Unemployment falling to 3.8%, the lowest level since April of 2000.

The positive performance of the U.S. jobs market has become routine under the Trump Administration. During the two-term presidency of Barack Obama (2008-16), U.S. Unemployment ranged from a low of 5% to a high of 9.1%. Since Trump’s election in 2016, Unemployment has gone from a high of 5.0% to a low of 3.9%. If nothing else, U.S. job seekers are happy with the impact of tax cuts and subsequent fiscal stimulus.

Gold Technical Outlook

December gold futures can’t seem to shake the value area established between 1200.0 to 1210.0. 

December Gold Futures (GC), Daily Chart
December Gold Futures (GC), Daily Chart

Here are two price points to keep an eye on for the late U.S. session:

  • Resistance(1): Bollinger MP, 1203.6
  • Resistance(2): Daily SMA, 1205.0

Bottom Line: December gold futures are range bound going into tomorrow’s U.S. Non Farm Payrolls report. Values are rotating in the vicinity of 1205.0-1200.0.

For the remainder of the session, short scalps from 1204.9 are an affordable way to trade this market. Using an initial stop at 1206.1, this trade produces 8 ticks on a sub-1:1 risk vs reward management plan.

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