Choppy Session Continues for Gold – Focus on the US NFP

During Friday’s Asian trading session, the yellow metal maintained its bullish early-day rally and drew some further bids around the $1,810 level, as the weaker US dollar supported gold. The US Dollar Index (DXY) refreshed its monthly low in Asia before recently paring the losses to 92.20.

The upbeat market sentiment was seen as one of the key factors behind the bearish moves in the US dollar. The weaker greenback tends to underpin the gold prices, as the price of gold is inversely related to the price of the US dollar. Apart from this, the cautious mood ahead of the key US Non-farm Payrolls (NFP), and mixed data concerning the coronavirus from Australia and New Zealand, is also boosting the safe-have appeal of the yellow-metal.

In addition to this, the buying bias surrounding the yellow-metal prices was also sponsored by the reports suggesting that Australia has logged a record high in coronavirus cases, and the number of daily cases in the UK has also jumped to a fresh multi-day high, leading to regulators pushing for a booster jab plan in September. On the other hand, China has recorded no new cases of the virus.  The market sentiment improved the previous day, as extra catalysts for the US jobs report for August marked a soft NFP, which keeps the market trading sentiment positive.

Despite the cautious mood ahead of the key US Non-farm Payrolls (NFP), mixed data concerning the coronavirus, from Australia and New Zealand resulted in the market trading sentiment maintaining its upward overnight  performance, and it remained well bid on the day. The S&P 500 Futures rose by 0.20% intraday, tracking the Wall Street benchmarks that closed mildly positive on the day. However, this could be attributed to the latest optimism over the receding hospitalization numbers in the US and fewer cases from New Zealand, which gave investors some hope.

Meanwhile, China has recorded no new coronavirus cases, and the UK is pushing for a booster jab plan in September. This resulted in optimism, and kept the sentiment in the market positive. It was further lifted after the US jobs report for August marked a soft NFP, versus 750K expected and 943K prior, doing away with Fed tapering concerns.

Elsewhere, the previous release of upbeat Australian trade balance figures also played a significant role in underpinning the market trading mood. Hence, the prevalent buying bias surrounding the market trading sentiment was a key factor that kept the US dollar lower.

The broad-based US dollar failed to stop its early-day declining streak, dropping to its lowest level in almost a month, as the week draws to a close. However, the upbeat market mood was one of the key reasons behind its fall, as a lift in Asian stocks pushed investors towards riskier assets. Investors now await the latest US jobs report, that could push the Federal Reserve to start asset tapering earlier than expected.

The US Dollar Index, which tracks the greenback against a basket of other currencies, had dropped by 0.04%, to 92.188 by 10:32 PM ET (2:32 AM GMT). Earlier, it hit the 92.189 mark for the first time since Aug. 5. Therefore, the bearish sentiment surrounding the US dollar was seen as a major factor that kept the gold price higher, as the price of gold is inversely related to the price of the greenback.

Looking ahead, traders will keep their eyes on the latest US jobs report, as bullion is likely to cheer weakness in the US jobs report for August, as it cuts the odds of the Fed tapering asset purchases. Meanwhile, the US ISM Services PMI for August, with a forecast of 61.5 compared to 64.1 prior, will also be key to watch. Besides this, coronavirus headlines and trade/political jitters will also entertain the markets.