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Price of Gold Fundamental Daily Forecast – More Two-Sided Position-Squaring Ahead of Friday’s NFP

By:
James Hyerczyk
Published: Jun 30, 2021, 15:14 UTC

Gains have been capped since the Fed’s major shift on monetary policy on June 16. Traders are now awaiting U.S. economic data for further guidance.

Comex Gold

In this article:

Gold futures are inching lower on Wednesday, pressured by a strong U.S. Dollar, but underpinned by softer Treasury yields. The market showed little immediate reaction to today’s stronger employment numbers for the month of June released by ADP. However, it is Friday’s jobs report from the Labor Department that will be more the focus of investor attention this week.

At 14:21 GMT, August Comex gold futures are trading $1763.10, down $0.50 or -0.03%.

The price action is likely being muted because investors are reluctant to take a major position until they see how the Fed responds to Friday’s labor numbers and if it will tighten its monetary policy sooner than expected.

US Private Payrolls Beat Expectations in June

US private payrolls increased more than expected in June as companies rushed to boost production and services amid a rapidly reopening economy, though a shortage of willing workers continues to hang over the labor market recovery.

The ADP National Employment Report on Wednesday showed hiring in the leisure and hospitality sector accounting for nearly half of the increase in private payrolls last month. Manufacturing payrolls growth slowed, likely reflecting labor shortages as well as scarce raw materials. A global shortage of semiconductors is hampering production of motor vehicles and some household appliances which require chips.

Private payrolls increased by 692,000 jobs last month. Data for May was revised lower to show 886,000 jobs added instead of the initially reported 978,000. Economists polled by Reuters had forecast private payrolls would increase by 600,000 jobs.

Leisure and hospitality payrolls increased by 332,000 jobs, adding to the 414,000 positions created in May. There were also solid gains in education and health services payrolls. Factories added only 19,000 jobs, below the monthly average 43,000 jobs in the past three months. Hiring at construction sites was strong.

US Pending Home Sales Increase to Highest Reading for May Since 2005

Contracts to purchase previously owned U.S. homes rose strongly in May to the highest level for that month since 2005.

The National Association of Realtors (NAR) said on Wednesday its Pending Home Sales Index, based on contracts signed last month, rose 8.0% to 114.7. Economists polled by Reuters had forecast pending home sales would decline 0.8% percent. Compared to one year ago, pending sales were up 13.1%.

Short-Term Outlook

Gold is hovering near its lowest level since April 15. Bullion prices are down 7.7% for the month, weighed down by the Fed’s sudden hawkish shift. But they are up 3% for the quarter.

Gold futures could consolidate the next two session ahead of Friday’s jobs data. The bias is expected to be to the downside, however, Gains have been capped since the Fed’s major shift on monetary policy on June 16. Traders are now awaiting U.S. economic data for further guidance.

With the surge in inflation seemingly under control, we believe Friday’s U.S. Non-Farm Payrolls report is going to be the main driver of the near-term price action.

Not only will traders be watching the headline payrolls number, but also the hourly wages for any sign of wage inflation. If both exceed expectations then look for gold to tumble further.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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