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Gold markets had a mildly negative session on Thursday, as the risk appetite of traders will have undoubtedly dwindle the bed. With the nonfarm payroll announcement later today, is more than likely that a lot of traders simply didn't want to be exposed to risky assets such as gold.
However, this market will be very interesting to watch after the announcement. With the Federal Reserve openly admitting that it is the job numbers that they are worried about the most, this announcement will be used as a measuring stick of sorts for how close we are to more quantitative easing out of the United States. If the number is very poor, quantitative easing is almost guaranteed at that point in time.
If there is to be more easing of the United States due to low employment numbers, there is a good chance that the gold market will eventually gain as the dollar will lose value based upon hopes of new quantitative easing. While this may seem a little counterintuitive, it does make sense if you think about it. The market will initially selloff if it is a bad number as people will be covering risk positions, but the market will almost undoubtedly start looking towards quantitative easing shortly thereafter this could be an interesting opportunity to buy a gold at cheaper prices if we do get the initial spike lower.
On the other hand, it is very possible that we get a bullish employment number. If that's the case, the dollar could very well strengthen as it would suggest quantitative easing is nowhere to be found. Add to that the fact that the Bank of England, Bank of Japan, and European Central Bank are all embarking on new easing measures, and it would certainly set up a strong US dollar positive market. If that's the case, the dollar gaining of course will weigh on the price of gold, at least priced in US dollars. Remember, some brokers will allow you to trade Golding Euros, Yen, Pounds, and some other currencies. If the dollar is gaining, and the central banks are easing, it is very likely the gold will appreciate in value much stronger against these currencies than the US dollar.
On a daily close above the $1650 level, we are buyers of the gold contract. We would also buy a supportive candle if it appears below as well. Of particular interest would be any cameras that are formed above the $1500 mark.