Gold trading alert: Non-farm payrolls coming, probability or stronger than expected! Gold prices this is the top?

By    6 Jan,2023

Spot gold is shaking slightly higher as there is some demand for a rebound adjustment after the overnight selloff, currently trading near $1837/oz. Gold prices weakened sharply on Thursday, away from the more than six-month highs set on Wednesday, as Federal Reserve officials saw no need to change the 2 percent inflation target and data showed the U.S. labor market was tighter than expected, boosting expectations that rate hikes will last longer and the dollar index surged to a nearly one-month high.


Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said the stronger dollar index has put pressure on gold. He stressed that the Federal Reserve will continue its hawkish stance for a longer period of time due to the continued strength of the labor market.

Anthony Saglimbene, chief market strategist at Ameriprise, said, "Clearly, the data shows that the labor market is very resilient. As long as the labor market is resilient, the Fed must continue to tighten financial conditions to reduce inflation, and investors are expected to pay close attention to the payroll inflation data in Friday's jobs report."

Technically, the U.S. dollar index in the last six months near the highs of the initial success, the short term bias to the long side, unfavorable to gold prices; and spot gold over the past two trading days recorded a "engulfing" bearish top signal, there is also the possibility of a short-term top, at least the short term there is further downside risk.

Investors need to focus on the U.S. December non-farm payrolls report, from this week's job openings, ADP data, initial claims data, ISM manufacturing PMI employment sub-index and other forward-looking indicators, December non-farm payrolls data bias towards strong performance, better than expected possibility, which is expected to provide further momentum to the dollar, gold prices are facing further downside risk. In addition, investors also need to pay attention to the U.S. December ISM non-manufacturing PMI, the market is expected to the U.S. service sector as a whole is still in the expansion phase.

U.S. initial jobless claims last week fell to a three-month low, ADP data stronger than expected

U.S. initial jobless claims fell to a three-month low last week, and layoffs plunged 43% in December, indicating that the labor market is still tight and could force the Fed to continue raising interest rates.

The Labor Department said initial jobless claims fell by 19,000 to a seasonally adjusted 204,000 in the week ended Dec. 31, the lowest level since late September. Economists were forecasting 225,000.

Continuing jobless claims fell 24,000 to 1,694,000 in the week ended Dec. 24, after hitting an 11-month high of 718,000 the week before.

Other data released Thursday also underscored the resilience of the labor market. Private employers hired far more workers than expected in December. The reports suggest that the economy remains firmly rooted at the end of 2022, despite significant layoffs in the technology sector and in rate-sensitive industries such as finance and housing.

The ADP report showed that private employment increased by 235,000 jobs in December, compared with an increase of 182,000 in November and expectations for an increase of 150,000 jobs.