Price of Gold Fundamental Daily Forecast – Trader Reaction to $1317.10 Will Determine Direction Today

Gold posted a two-sided trade on Thursday before closing higher. The market was under pressure early in the session as investors continued to react to Wednesday’s somewhat hawkish U.S. Federal Reserve minutes. Gold also weakened after the release of the upbeat ADP private sector jobs report. However, the market recovered to close higher after the U.S. Dollar fell against a basket of currencies, particularly the Euro.

February Comex Gold settled at $1321.60, up $3.10 or +0.24%.

In the U.S. on Thursday, the Challenger Job Cuts report came in at -3.6%. According to the report, U.S. employers announced plans to cut 32,423 jobs in December, bringing the year’s total to a low not seen since 1990.

“The tight labor market, coupled with uncertainty surrounding health care and tax legislation, possibly kept employers from making any long-term staffing decisions this year,” CEO John Challenger said in a statement. “However, 2018 may see an increase in job cut announcements, as companies realign with consumer demand.”

The ADP Non-Farm Employment Change came in at 250K, beating the 191K estimate. The month was the best for job creation since March and topped the 185,000 in November, a number that was revised lower by 5,000.

Weekly Unemployment Claims rose to 250K. This was higher than the 241K estimate and the previous week’s 247K.

Forecast

Gold is trading lower early Friday as investors trim positions ahead of today’s U.S. Non-Farm Payrolls report.

At 0750 GMT, February Comex Gold is trading $1319.60, down $2.00 or -0.15%.

The current rally is being driven by momentum. The catalyst behind the rally is the weaker U.S. Dollar. Although the Fed is expected to raise rates at least three more times in 2018, investors feel that this is old news and instead are betting on the possible end of stimulus by the European Central Bank and a possible rate hike before the end of the year.

The key area for chart watchers is $1317.10. Gold prices could weaken on a sustained break under this level. A move though $1302.10 could be especially bearish for the market.

A sustained move over $1317.10 will signal that buyers are still coming in to support the market. The daily chart shows there is plenty of room to the upside with the next major target coming in at $1365.80.

Fundamentally, investors will get the opportunity to react to several key pieces of economic data from the U.S.

The Non-Farm Payrolls report is expected to show the economy added 190K jobs in December. Average Hourly Earnings are expected to rise 0.3% and the Unemployment Rate is expected to remain at 4.1%.

The trade balance deficit is expected to increase to 49.7 billion. ISM Services PMI is forecast at 57.6, up slightly from 57.4. Factory Orders are estimated to have risen 1.1%.

Finally, FOMC Member Loretta J. Mester is expected to give a speech. Traders will be listening for commentary on the jobs report, inflation and the number of future rate hikes.