Price of Gold Fundamental Daily Forecast – Strong on NFP Below 300K, Weak on NFP Over 600K

Gold futures are inching higher on Friday, underpinned by the decisions by a number of major central banks to stand pat on interest rates. After a week filled with volatility, the focus now shifts to a monthly U.S. jobs report due at 12:30 GMT. Bullish traders are hoping to add to the market’s nearly 1% gain for the week.

At 11:29 GMT, December Comex gold futures are trading $1794.00, up +0.50 or 0.03%.

Technically, the market is straddling a pair of key 50% levels at $1795.00 and $1800.00. Trader reaction to this area should set the tone for the session with a strong upside bias developing over $1800.00 and selling pressure resuming on a sustained move under $1795.00.

Gold Firms after Some Major Central Banks Dampen Rate Hike Hopes

Gold futures are trading at the top of their weekly range as investors have been encouraged to reset monetary policy expectations this week, after some of the biggest global central banks knocked back bets for early rate hikes.

European Central Bank President Christine Lagarde pushed back on Wednesday against market bets for a rate hike as soon as next October and said it was very unlikely such a move would occur in 2022.

Also on Wednesday, Fed Chair Jerome Powell said he was in no rush to hike borrowing costs, even as the Federal Open Market Committee announced a $15 billion monthly tapering of its $120 billion in monthly asset purchases.

In the U.K. on Thursday, the Bank of England caught the market off-guard by keeping rates steady on Thursday.

Daily Forecast

On Friday, the Labor Department is expected to report that 455,000 new jobs were added to the economy in October, a notable improvement from September’s disappointing 194,000 figure.

But to really give the Fed confidence when it considers raising rates in perhaps mid-2022, the number of jobs created is going to have to come in much higher. This need for larger job numbers was emphasized by Federal Reserve Chairman Jerome Powell in his press conference on Wednesday.

“Once the delta variant really does continue to decline what’s going to happen to employment? Are we going to start to see over the winter significant increases in jobs again? If you look back to 3-6-9 month average, job creation is between 550,000-600,000… if we can get back on that path we would be making good progress,” he explained during his press conference following the November meeting.

This being said, I agree with Mr. Powell. If today’s report comes in at 455,000 or lower, gold prices could strengthen because it could convince the Fed that the labor market isn’t strengthening fast enough to warrant an early rate hike. If the number of jobs added comes in north of 600,000 then look for gold prices to plunge back toward the $1770.00 area.