Price of Gold Fundamental Daily Forecast – Weak Jobs Data Will Be Supportive

Gold futures are trading lower ahead of the release of the U.S. Non-Farm Payrolls report at 1330 GMT. The market posted a lower-lower on the daily chart, making $1331.10 a new minor top. This indicates profit-taking and position-squaring. On Thursday, the market hit its highest level since mid-June as investors continued to react to the dovish tone set by Wednesday’s U.S. Federal Reserve interest rate decision, monetary policy statement and remarks by Chairman Jerome Powell.

At 09:51 GMT, April Comex gold is trading $1323.90, down $1.30 or -0.10%.

Early strength in the stock market indicates that risk sentiment is still fairly strong. This could also be pressuring gold prices. The catalyst behind this assessment is likely the upbeat tone in the markets following the two-day high level trade talks between the United States and China.

On Thursday, President Trump said he would meet with Chinese President Xi Jinping soon to try to seal a comprehensive trade deal as the top U.S. negotiator reported “substantial progress” in the two days of high-level talks, CNBC said.

Traders are now likely to shift their focus to today’s U.S. jobs data and manufacturing PMI report.

U.S. Non-Farm Payrolls Report

Traders shouldn’t expect the same blow-out numbers they saw in December. This is because the more than month-long partial federal government shutdown is likely to have distorted the data. Some are saying the shutdown “may dampen the number of new jobs added and distort the reading on wage growth.”

The consensus forecast shows the U.S. economy may have added 165,000 non-farm payrolls in January. The unemployment rate is expected to come in unchanged at 3.9%. The most important average hourly earnings are expected to have increased 0.3% month-over-month. This would be lower than last month’s 0.4% reading. Annually, earnings growth is expected to hold steady at 3.2%.

Forecast

Any weakness in the labor market report especially a drop in wage inflation is likely to be bearish for the U.S. Dollar. This should drive up demand for dollar-denominated gold because it will support Fed Chair Powell’s statement that “The case for raising rates has weakened somewhat.”

Traders will also have the chance to react to a slew of economic data including Final Manufacturing PMI, ISM Manufacturing PMI, Revised University of Michigan Consumer Sentiment, Construction Spending and Final Wholesale Inventories.

The report likely to generate the biggest reaction is ISM Manufacturing PMI. It is expected to come in at 54.1. A lower number should be supportive for the gold prices.