Daily Brief, Aug, 2 – Trading Gold on Non-farm Payroll Figures

Posted Friday, August 2, 2019 by
Arslan Butt • 2 min read

Happy Friday, Fellas.

Yesterday, the market mostly reacted to the Fed rate decision, but today the focus stays on the most awaited US Nonfarm Payroll which is coming out later in the day. On Thursday, the US dollar rose following the Federal Reserve cut rates a day earlier but cautioned that it was not necessarily the start of a cycle of monetary loosening, sending the Euro to a 26-month low and the British Pound to a 30-month low.

Anyway, I’m really excited to trade today as we have several high impact economic events from the United States and Canada which are going to cause some serious fluctuations. Let’s take a quick look at them!

Watchlist Top Events To Watch Today

USD – Labor Market Report – 12:30 GMT

The US NFP (Nonfarm Employment Change) and the unemployment rate will remain under the spotlight. Both of these economic data sets will be monitored at 12:30 GMT. NFP is expected to be negative at 160K vs. 224K during the previous month.

Whereas the unemployment rate is likely to stay unchanged at 3.7% and the Average Hourly Earnings are expected to rise by 0.2% vs. 0.2% previously. The weaker data will offer an opportunity to short the Greenback for a quick 60-100 pips and vice versa.

Forex geeks are anxiously waiting for the Non-farm payroll as it’s one of the macroeconomic events which significantly shake the markets. It shows a change in the number of employed people during the previous month, excluding the farming industry

Now the question is whether it’s likely to be positive or negative. Well, only time will tell. But a logical guess considering the ADP Non-farm payroll is that it’s likely to be close to the forecast figure. Any surprise change in the figure will be a trade opportunity for us.

GOLD – XAU/USD – The Metal Awaits NFP

Today, global financial markets are likely to exhibit extreme volatility over the release of multiple fundamentals, therefore the same rule applies to gold. This week, gold has persistently traded sideways in a wide range of $1448 – $1400, trading as we planned throughout the week.

Gold gained slight support on the ADP non-farm employment change readings as it fell short of forecast. It published a 156K rise in hiring versus the forecast of 150K gain in June. To make it worse for gold, they also revised the previous ADP figure from 102K to 112K, indicating that we may see positive revisions for previous NFP figures.

Latest US unemployment claims data recorded a rise to 215K during the previous week from 215K, but there was no significant reaction as the change wasn’t surprising.

Key Technical Drivers – Intraday

Looking at the 2-hour chart of gold, we can see that it has crossed above $1432, making it support now, while it’s still trading below $1,450 the double top resistance. Stochastics has entered the overbought region, signifying the potential for a bearish reversal below $1450.

Gold has also crossed above 50-periods moving averages, which signals a bullish bias of investors, but as the market is choppy due to upcoming news, we need to ignore the EMA crossover.

Gold – XAU/USD – Trading Levels
Support Resistance
1408.46 1431.29
1398.38 1444.05
1375.54 1466.88
Key Trading Level: 1421.21

Gold – XAU/USD – Trade Idea

If you wanna trade gold today, I advise keeping a close eye on $1450, the crucial trading level.

Positive NFP – Having a sell position below $1450 with a stop loss above $1456 and a take profit of $1432 & $1425 seems to be a good idea.

Negative NFP – Buy positions above $1424 with a stop loss below $1419 and a take profit at $1432 and $1,448 is preferred.

Good luck!

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