In This Article:
Gold futures are inching higher early Friday, mirroring the US Dollar chart pattern, as traders position-themselves ahead of the release of the U.S. Non-Farm Payrolls report at 12:30 GMT.
Despite mixed messages from the Federal Reserve, the market remains in a position to post its biggest weekly loss in eight. Bullish traders are hoping a combination of relatively cheap prices and a favorable jobs report triggers the start of a near-term rally.
At 06:06 GMT, August Comex gold futures are trading $1741.30, up $1.60 or +0.09%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $162.26, up $0.12 or +0.07%.
Fed Hawks Hit Downshift Button
Two of the Federal Reserve’s most vocal hawks on Thursday said they would support another 75 basis-point interest rate increase later this month but a downshift to a slower pace afterward, even as both downplayed the risk of higher borrowing costs pushing the United States into recession, Reuters reported.
Focus Shifts to Non-Farm Payrolls
Friday’s June U.S. Non-Farm Payrolls report is expected to show the economy added 260K new jobs. The unemployment rate is expected to remain steady at 3.6% and average hourly earnings are expected to come in at 0.3%.
Unless the jobs report misses on all levels, the market is not likely to change bets on a 75-basis point rate hike in July, followed by a 50 basis point hike in September. After that it’s a guess.
Traders will be watching the average hourly wages figure for signs of inflation. A stronger-than-expected rise will give the Fed reason to continue on its aggressive path. This would lift the U.S. Dollar, while putting pressure on the gold prices.
Short-Term Outlook
Trader reaction to $1751.10 is likely to determine the direction of the August Comex gold market on Friday.
Bearish Scenario
A sustained move under $1751.10 will indicate the presence of sellers. If this creates enough downside momentum then look for a test of the weekly low at $1730.70, followed by the September 29, 2021 main bottom at $1729.20. This is a potential trigger point for an acceleration to the downside with the March 8, 2021 main bottom at $1694.90 the next major target.
Bullish Scenario
A sustained move over $1751.10 will signal the presence of buyers. If this generates enough upside momentum then look for the rally to possibly extend into the former main bottom at $1764.10. Overcoming this level will indicate the buying is getting stronger. Making a minor retracement zone at $1782.80 – $1795.10 the next key target area.
For a look at all of today’s economic events, check out our economic calendar.