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Market update: gold price forecast - US jobs data to shape near-term trend, setup on XAU/USD


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Friday's US nonfarm payrolls report could sway gold prices, with weak job data potentially boosting and strong data dampening them. This article explores gold's short-term technical outlook.

 

original-size.webpSource: Bloomberg

 

Written by: Diego Colman | Market Analyst, New York
 
Publication date: 

The Federal Reserve concluded earlier this week its first meeting of 2024, voting to maintain its policy settings unchanged. The FOMC also abandoned its tightening bias, but indicated it will not rush to cut borrowing costs. Chairman Powell went a step further by acknowledging that officials may not yet be confident enough to remove restriction at their next gathering.

Although the possibility of a rate cut in March has diminished, the situation could change again if incoming information shows that activity is starting to roll over. In the grand scheme of things, a weaker economy could prompt policymakers to reconsider their stance; after all, data dependency has been the guiding principle for the central bank recently.

Given the present state of events, the January US employment report will assume greater importance and carry added weight. That said, Wall Street projections suggest US employers added 180,000 workers last month, though a softer outcome should come as no surprise following a subdued ADP reading and rising jobless claims for the period in question.

Upcoming us jobs report

 

original-size.webpSource: DailyFX

If nonfarm payrolls figures prove lackluster and fall well short of expectations, a March rate cut might be back on the table. Under these circumstances, we could observe a sharp retracement in US treasury yields and the US dollar. This scenario is likely to foster a constructive environment for gold in the near term.

On the other hand, if NFP numbers beat consensus estimates by a wide margin, there’s potential for further reduction of dovish wagers on the Federal Reserve’s monetary policy outlook. In this scenario, bond yields and the greenback could accelerate to the upside, weighing on the precious metals complex. In this context, bullion could find itself in a precarious position in February.

Gold price technical analysis

Gold climbed on Thursday, pushing past the $2,050 barrier and coming within a hair's breadth of breaking $2,065, a key ceiling. With the bulls reasserting control, this resistance could soon be overcome. If that scenario plays out, a rally toward $2,085 is possible. On further strength, the focus will turn to $2,150.

Conversely, if buying interest fades and XAU/USD pivots lower, it's vital for traders to watch the $2,050 level for bearish activity. If this area fails to offer support, a drop toward the 50-day simple moving average may unfold, followed by a possible retest of $2,005. Below this floor, all eyes will be on $1,990.

Gold price daily chart

 

original-size.webpSource: TradingView

 

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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