Price of Gold Fundamental Daily Forecast – Rising Treasury Yields Capping Gains After NFP Headline Miss

Gold futures are inching higher on Friday shortly after the release of the December U.S. Non-Farm Payrolls report. The headline number came in below expectations, but the unemployment rate fell sharply.

Nonetheless, U.S. Treasury yields rose on the news, indicating that investors still believe the labor market is strengthening enough to warrant a potential rate hike in March. However, gold traders may be adjusting some of their short positions to reflect the headline miss.

At 14:15 GMT, February Comex gold is trading $1793.60, up $4.40 or +0.25%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $167.03, down $2.03 or -1.20%

Technically, gold futures found support following a test of its major retracement zone at $1781.00 to $1757.10. If this move creates enough upside momentum then look for the intraday rally to possibly extend into at least $1807.20.

US Economy Added Fewer Jobs than Expected in December

U.S. employment increased less than expected in December amid worker shortages and job gains could remain moderate in the near-term as spiraling COVID-19 infections disrupt economic activity.

Non-Farm Payrolls rose by 199,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for November was revised up to show payrolls advancing by 249,000 jobs instead of the previously reported 210,000.

The unemployment rate dropped to 3.9% from 4.2% in November, underscoring tightening labor market conditions.

Economists polled by Reuters had forecast payrolls rising by 400,000 and the unemployment rate dipping to 4.1%. Payrolls estimates ranged from as low as 150,000 to as high as 1.1 million jobs.

Daily Outlook

The price action after the report doesn’t represent a major change in trend, but rather profit-taking, short-covering and position-squaring due to the headline miss. Furthermore, gains are likely to be capped as long as Treasury yields continue to rise.

Technically, we’re likely to continue to see technical bounces on dips as long as $1781.00 to $17571.0 holds as support. However, we’re just as likely to see selling on rallies into $1817.50 to $1832.70.

If this market is getting ready to move lower then new shorts could come in on an intraday rally into $1807.20.