Price of Gold Fundamental Daily Forecast – Light-Volume, Two-Sided Trade Expected to Continue Ahead of NFP

Gold futures are edging higher on Thursday with the market mirroring the price action in U.S. Treasury yields. While rising overnight yields may be putting a cap on gains, the steady-to-lower U.S. Dollar could be underpinning prices.

Increased demand for riskier assets could also be weighing on the gold market. Uncertainty over Friday’s U.S. Non-Farm Payrolls report is probably the major factor contributing to this week’s low-volume rangebound trade. Traders are also monitoring U.S. debt ceiling negotiations.

At 11:25 GMT, December Comex gold futures are trading $1764.90, up $3.10 or +0.18%.

Investors Await US Payrolls Data

Gold’s early two-sided trade is likely being fueled by traders trying to make a market. Most of the major players are on the sidelines so at times it appears the trade is being generated by computer versus computer. There is too much at stake to commit to a direction ahead of the U.S. jobs report.

With a substantial improvement in the labor market, which would let the Federal Reserve start tapering its stimulus as early as November, gold investors risk the possibility of a steep sell-off of $50 or more. On the other hand, a weaker-than-expected number could give the Fed a reason to pause, which could drive prices back to $1800.00 rather quickly.

U.S. Non-Farm Payrolls data on Friday is expected to show an improvement in the labor market, which is likely to prompt the central bank to begin withdrawing pandemic-era support for the economy before year-end.

Traders are expecting the U.S. economy to have added 490,000 jobs in September. Average hourly earnings are expected to show a 0.4% increase, down from 0.6% and The Unemployment Rate is expected to dip to 5.1%, down from 5.2%.

On Wednesday, the ADP reported private companies hired faster than expected last month, despite worries about the delta variant. Private jobs rose by 568,000 for the month, better than the Dow Jones estimate from economists of 425,000.

Thursday’s Weekly Unemployment Claims report, which could be the source of some volatility, is expected to dip from 362K to 350K.

Daily Forecast

We’re looking for the two-sided trade to continue with prices mostly influenced by the direction of U.S. Treasury yields. Intraday breakouts in either direction are a possibility, but the well-below average volume makes them risky to chase ahead of Friday’s NFP report that should generate an even bigger response by traders.