NFP Could Boost Gold to New Records

The upcoming Non-Farm Payrolls (NFP) due on Friday continue to induce caution among investors, maintaining gold within a range as analysts debate the potential for further easing over the remainder of the year.

Holding Tight Ahead of Events

Gold prices have ranged this week, pausing their months-long upward trend seen over the summer. This break in upward momentum coincided with comments from Federal Reserve Chair Jerome Powell earlier this week, where he suggested that interest rates may not fall as quickly as markets had anticipated. Markets are now looking ahead to the important upcoming jobs report, with the significant reaction to August's numbers still fresh in traders' minds as they assess the current state of the US economy and how much interest rates could fall.

Recent data has shown that the US labour market is cooling faster than expected, and it is seen as the catalyst for the Fed's recent 50 basis point interest rate cut. Powell said the Fed may have cut rates in July if they had the revised jobs figures available at that time. The rise in part-time employment also suggests a loosening labour market could push the Fed to cut rates more sharply. However, the increase in job openings reported on Tuesday shows there is no clear trend, giving more importance to what may happen in Friday's jobs report.​

What the Market is Looking For

Analyst consensus is that the number of jobs added in September will be about 146K, similar to the 142K jobs added in August. This would be below the 225K jobs needed each month to keep up with the growing population. However, this aligns with private data from ADP showing that 143K jobs were added in September. The unemployment rate is forecast to tick up slightly to 4.3% from 4.2% last month. Participation in the labour force is expected to increase to 62.9% from 62.7%. The rise this month is seen as returning to July's level after a small decline in August. Average hourly earnings are projected to continue their gradual decline to a 3.7% annual increase, down from 3.8% previously.

Before Powell's speech earlier in the week, there was a chance the Fed would cut interest rates twice in November. Now, most believe there will be a single rate cut. Looking further ahead, most still expect another three reductions by the end of the year. Labour market weakness could reinforce these expectations, while a stronger-than-expected report may suggest a dial back to the 50 basis point cut in total by December instead.​

Gold in Short-Term Triangle?

The gold price has been moving sideways in what resembles a short-term triangle pattern. This could continue being the case unless the price drops below $2650 ahead of the upcoming NFP. If it does break lower, it may form a temporary flag pattern, dropping to around $2620. However, if the price maintains its current pattern or bounces up from around current levels or a double bottom formation, this could send gold back up towards the record of $2710 through $2675 and $2695, with the next key price point at $2750.​

Source: SpreadEx Gold

The upcoming US jobs report on Friday continues to induce caution among investors, keeping gold prices within a narrow range. Analysts are debating how the data may impact further interest rate cuts by the Federal Reserve this year. The consensus forecast is for a moderate increase in jobs added in September and a slight rise in unemployment, which would align with other recent indicators of a cooling labour market. This could reinforce expectations of another rate cut in November, while a stronger-than-expected report may suggest a slower pace of easing.