Price of Gold Fundamental Daily Forecast – Strong Jobs Data Could Trigger Spike into $1754.50 Over Short-Run

Gold futures are trading lower on Friday, shortly before the release of the July U.S. Non-Farm Payrolls report at 12:30 GMT. The market is being pressured by rising U.S. Treasury yields and a stronger U.S. Dollar. The price action suggests traders are betting on bullish jobs growth.

At 09:18 GMT, December Comex gold futures are trading $1801.50, down $7.40 or -0.41%.

Today’s early sell-off has put gold in a position to post its worst weekly decline since mid-June. The market has been under pressure this week due to stronger-than-expected economic data and hawkish comments from a high-ranking Federal Reserve official.

Key Fed Official Sees Rates Liftoff in 2023 as Policy Debate Heats Up

The contours of debate within the U.S. central bank over when to dial back support for the economy burst into the open on Wednesday as a key architect of the Federal Reserve’s new policy strategy said he feels the conditions for raising interest rates could be met by the end of 2022, Reuters wrote.

“Commencing policy normalization in 2023 would, under these conditions, be entirely consistent with our new flexible average inflation targeting framework,” Federal Reserve Vice Chair Richard Clarida said in a webcast discussion hosted by the Peterson Institute for International Economics.

Clarida helped craft that framework, adopted last August, under which the Fed has pledged to keep rates at their current near-zero level until the economy reaches full employment, and inflation hits the Fed’s 2% goal and is on track to moderately exceed that pace for some time.

Meanwhile, Clarida added, he would “certainly” see the Fed announcing a reduction of its $120-billion-a-month asset purchase program later this year, given the surprising pace of the economic recovery from the coronavirus pandemic.

Clarida, Powell’s second-in-command, offered on Wednesday a more precise and bullish view on when the Fed will hit its maximum employment and flexible 2% inflation targets, even as he vouched for Powell’s expectation that the Delta variant of COVID-19 would not blow the economy off course.

“I believe that these…necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022,” Clarida said, Reuters reported.

Daily Forecast

A solid payrolls report coupled with this week’s strong economic numbers and hawkish Fed commentary could weigh on gold prices. The trigger point for a potential acceleration to the downside is $1795.00. If this price fails, the market has a clean short at $1754.00.

Steady-to-weaker jobs data would fuel a short-covering rally in gold with $1839.90 to $1859.70 likely to put a cap on gains.

A weak jobs report won’t be a free pass for gold bulls. It will only put more emphasis on the September report. The last one before the Federal Reserve meets on September 21-22. A few Fed members said earlier in the week that they would like to see two employment reports before making their decisions about tapering.

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