Price of Gold Fundamental Daily Forecast – Stimulus Optimism, Weak NFP Report Should Be Supportive

Gold futures are inching higher on low volume on Friday as traders await the release of the U.S. Non-Farm Payrolls report at 13:30 GMT that could set the tone in the marketplace. Despite the tight trading range, the market remains on track to post its first weekly gain in four as the U.S. Dollar hit multi-year lows on expectations of additional U.S. stimulus.

At 11:30 GMT, February Comex gold is trading $1842.50, up $1.40 or +0.08%.

GOP Congressman:  New Bipartisan COVID Stimulus Bill in ‘Range of Reason’ as Momentum Shifts to Act

After a more than $90 sell-off last week, gold rebounded this week as the tide on Capitol Hill shifted in favor of compromising to pass a new economic stimulus package to help Americans and U.S. small businesses struggling during the coronavirus pandemic, the leaders of the bipartisan House Problem Solvers Caucus told CNBC on Thursday.

The Problem Solvers Caucus this week unveiled a $908 billion coronavirus stimulus plan with a bipartisan group of senators, including Sens. Joe Manchin, D-W.Va, and Mitt Romney, R-Utah.

House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, who had months backed a more expensive relief bill, but their support behind the bipartisan proposal Wednesday, calling on Senate Majority Leader Mitch McConnell to use it as the basis begin stimulus negotiations.

McConnell said on the Senate floor on Thursday,” Compromise is within reach. We know where we agree. We can do this.” He also sees “hopeful signs.”

“Now you’re seeing the movement in the Senate. You see the White House in a position to potentially sign a package. They recognize we have to get this done as Covid surges, as people continue to suffer, businesses running out of the lifelines,” added Reed. The bottom line is, this is right in the range of reason. It’s not a perfect bill, but it is a compromise bill that can bring people together.”

Pace of Job Gains Likely Slowed in November

Economists believe the rate of job gains in November are expected to be weaker than in October, reflecting the impact of virus-related shutdowns by states and local governments due to the record spread of COVID-19.

The U.S. economy is expected to have added 440,000 jobs, compared to 638,000 in October according to Dow Jones. The unemployment rate is estimated to have decreased to 6.7% from 6.9%.

The big surprise in this Non-Farm Payrolls report could be in the unemployment rate so traders should brace for two-sided price action. This occurs when the payrolls number is bullish and the unemployment rate is bearish, or vice-versa.

Daily Forecast

A weak U.S. Non-Farm Payrolls report should be supportive for gold because it will likely encourage Congress to get moving on the new stimulus package. The dollar should weaken on the news, which would likely drive up demand for dollar-denominated gold.

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