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Economic Events Outlook, Feb 1 – Trading Gold on the US Nonfarm Payroll

Posted Friday, February 1, 2019 by
Arslan Butt • 2 min read

Happy Friday, traders.
A day before, the US dollar weakened across the board after the Federal Reserve vowed to be patient with further interest rate hikes. Is it likely to continue its bearish trend? We will have to wait and watch today as the economic calendar is fully packed with market-moving economic events. The US labor market report remains at the top as this fundamental is too good to miss.

Top Events To Watch Today

U.S, Dollar – USD

The NFP (Nonfarm employment change) and the unemployment rate, both these economic events will be closely monitored at 13:30 (GMT).

Back in December, the US labor market enjoyed an excellent month with 312K jobs, blowing expectations. Wages also upbeat the forecast with an increase of 0.4% m/m and 3.2% y/y. While the unemployment rate grew to 3.9%.

This month, the unemployment rate is expected to drop from 3.8% to 3.9%. Meanwhile, the non-farm employment change is expected to have produced only 165K jobs vs. 312K in December. Looks like the partial US government shutdown is going impact the market.

On Wednesday, according to the January ADP National Employment Report, the private sector employment increased by 213,000 jobs from December to January. This leads to positive sentiment for the Greenback and investors will be expecting a strongly positive NFP figure today.

Along with the nonfarm payroll and unemployment rate, we need to focus on the Average Hourly Earnings. In December, the earnings picked up from 0.2% to 0.4%, signaling growth in the labor market, but economists aren’t much optimistic about this month’s report. The figures are expected to drop to 0.3% vs. 0.4% beforehand.

GOLD – XAU/USD – Is It Going To Reverse?

Recalling our previous analysis, gold formed “Three White Soldiers ” pattern which a strong bullish signal. However, the market usually retraces back before the continuation of bullish momentum.

Gold faced a solid resistance near $1,325 trading level and managed to close an intraday candle below the same level. This extends solid support to investors’ bearish bias. The leading indicators, RSI and Stochastics are holding above 80 and a shooting star candle on the daily timeframe is signaling a potential reversal in gold.

Gold – XAU/USD – Trading Levels
Support     Resistance
1318.01      1325.76
1314.43      1329.92
1306.69     1337.67
Key Trading Level: 1322.18

Gold// XAUUSD – Trading Idea

Today, the idea is to stay bearish below $1,322 with a stop loss above $1,325 and take profit around $1,314 today.

All the best for today and have an awesome weekend!

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