FXEMPIRE
All

Price of Gold Fundamental Daily Forecast – Long Hedge Bets Payoff as U.S. Stock Market Declines

Gold traders were betting heavily on a stock market decline throughout the week and it looks like the bet is paying off as Friday’s stock market weakness is driving gold prices higher despite a stronger U.S. Dollar.
James Hyerczyk

Gold is trading higher on Friday shortly after the cash market opening and the release of the U.S. Non-Farm Payrolls report. Driving the market higher is lower demand for risky assets driven by a sell-off in global equity markets. U.S Treasury yields are also lower due to safe-haven demand, while the U.S. Dollar remains strong despite a jump in the number of jobs in January.

At 14:55 GMT, April Comex gold is trading $1576.20, up $6.10 or +0.39%.

US Non-Farm Payrolls Report

Non-Farm Payrolls surged 225,000 in January, well above Wall Street estimates for a 158,000 gain.

Average Hourly Earnings rose 3.1% over a year ago to $28.44, ahead of estimates for 3% growth.

The Unemployment Rate ticked higher to 3.6%, but for the right reason as the labor force participation rate increased 0.2 percentage points to 63.4%, matching its highest level since June 2013.

US Dollar Rises

The U.S. Dollar rose against a basket of major currencies on Friday with a weaker Euro driving most of the upside momentum. The Euro fell to its lowest level since October on Friday after German industrial output for December recorded its biggest decline in a decade and strong employment numbers in the United States encouraged investors to buy the dollar.

US Stock Indexes Decline

Despite the release of better than expected jobs data, stocks are under pressure following a massive four-day rally. This type of price action suggests the market may have been overbought this week.

The selling pressure actually began in Asia, as China delayed the release of trade data for January. China’s trade data for January, that was supposed to be released early Friday, will be combined with February’s trade data, according to a Reuters report citing the country’s customs office.

Daily Forecast

Gold traders were betting heavily on a stock market decline throughout the week and it looks like the bet is paying off as Friday’s stock market weakness is driving gold prices higher despite a stronger U.S. Dollar.

Given the early reaction to the stock market weakness, lower Treasury yields and the rising U.S. Dollar, gold is likely to remain underpinned mostly be falling demand for risk.

This week’s stock market rally was primarily fueled by strength in Asia due to the impact of stimulus from the Peoples’ Bank of China. With Asia weakening ahead of the weekend, U.S. stocks could remain under pressure throughout the session. This could help give gold a strong upside bias into the close.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US