Price of Gold Fundamental Daily Forecast – Struggling as Jobs Report Delivers as Expected

Gold futures are trading lower on Friday shortly after the release of the U.S. Non-Farm Payrolls report at 12:39 GMT. The report showed the impact of the coronavirus-induced economic shutdown tore through the U.S. labor market in April at historic levels, slashing 20.5 million workers from the workforce and sending the unemployment rate skyrocketing to 14.7%, the Labor Department reported Friday.

At 12:52 GMT, June Comex gold futures are trading $1713.70, down $12.10 or -0.70%.

Economists surveyed by Dow Jones had been expecting payrolls to shed 21.5 million and the unemployment rate to go to 16%. April’s unemployment rate topped the post-war record 10.8% but was short of the Great Depression high estimated at 24.9%. The financial crisis peak was 10% in October 2009.

The government report showed a more encompassing measure that includes those not looking for work as well as those holding part-time jobs for economic reasons also hit an all-time high of 22.8%. That reading may be a more accurate picture of the current jobs situation as millions of workers being paid to stay home and thus not willing or able to look for new jobs.

In all, the rolls of the unemployed surged to 23.1 million, a jump of 15.9 million over March.

As expected, the worst-hit sector was leisure and hospitality, which lost a staggering 7.7 million workers, a total that included a 5.5 million drop in eating and drinking establishments.

Gold is probably weakening because the jobs report contained little surprises. The weekly jobless reports alone should’ve been enough to tell you that the non-farm payrolls report would show tremendous losses.

Furthermore, the Fed knew it and the government knew it, which is why they respectively throw monetary and fiscal stimulus at the economy. This has already been priced into the gold market.

Daily Forecast

If gold goes down then this will indicate that traders are cutting positions as they watch restrictions being eased in the hopes of the start of an economic recovery. This tells me that over the short-run, gold may struggle.

Furthermore, traders are going to keep watching the coronavirus numbers because they know that if the easing of lockdowns occurred to soon, or if Americans stop following the rules about social distancing, the coronavirus will flare up again and the economy will be locked down again.

This second wave of infections could be worse than the first, which would mean the economy would need more stimulus money. Since this is bullish for gold, the long-term uptrend would resume.