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Gold Price Awaits NFP Signals, Navigates Rate Cut Expectations

GOLD prices remain confined within a narrow range during Friday’s Asian session, extending a multi-day consolidation despite edging into positive territory for the third consecutive day. Investors are cautious, holding out for the US Nonfarm Payrolls (NFP) release to gauge potential shifts in labor market strength, which may influence the Federal Reserve’s rate decisions.

The anticipation that US interest rates have plateaued provides a backdrop of support for GOLD , yet the recent uptick in US Treasury yields and a revitalized dollar demand are restraining bullish bets on the precious metal.

The lead-up to the NFP report witnesses the dollar finding some footing, partially due to a rebound in US Treasury bond yields, which presents a counterforce to gold’s advance. Concurrently, a robust overnight rally in US equity markets signals investor risk appetite, creating headwinds for the safe-haven asset.

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Nonetheless, a significant pullback in gold prices is tempered by the broader dovish outlook on the Fed, darkening global economic prospects, particularly concerns over China’s outlook, and persistent geopolitical tensions.

The market’s firm belief in a cessation of the Fed’s rate hikes and a possible onset of rate reductions by March 2024 continues to underpin gold’s appeal. Recent labor market data, including the JOLTS Job Openings and ADP report, suggest a cooling employment sector, reinforcing expectations of a dovish pivot by the Fed.

According to the CME Group’s FedWatch Tool, the likelihood of a Fed rate cut by March 2024 is priced in at over 60%, offering a tentative floor to gold prices.

Investors now await the US employment data for further clarity on labor conditions and the Fed’s potential policy trajectory. The anticipated NFP figures are expected to reveal a 180K job increase in November, with the unemployment rate holding at 3.9%.

Equally critical will be the Average Hourly Earnings data, anticipated to reflect a monthly rise of 0.3% and an annual increase of 4% through November. Any unexpected weakness could prompt the Fed to moderate its hawkish rhetoric in the upcoming months, potentially propelling gold amidst the economic downturn fears and geopolitical unease.

Gold Technical Analysis

Gold’s price action continues to be constrained within a narrow trading band, closely orbiting the 50-day Exponential Moving Average (EMA50). This ongoing pattern supports the prevailing bullish outlook set to persist in the short term, framed within an upward channel visible on the chart.

The primary target remains at the $2075.25 level, contingent upon the metal maintaining above the $2016.00 threshold, crucial for sustaining the upward momentum.

For today’s trading, gold is anticipated to oscillate between the support level of $2015.00 and the resistance mark of $2050.00, indicating a bullish trend for the day.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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