Gold: US Jobs Report in Spotlight as Traders Analyze FOMC, According to Gold Price Prediction

VOT Research Desk

Nov 3

Market Analytics and Considerations

After dropping about 1% on Wednesday in reaction to the FOMC verdict, gold prices are now stabilizing. In a widely anticipated action, the US central bank increased its benchmark interest rate by 75 basis points. It’s quite premature, in my estimation, to think about or to be talking about suspending our rate hikes, Fed Chair Jerome Powell said in response to the assertion that the Fed will stop raising interest rates. Mr. Powell continued by stating that rates will probably need to increase beyond what was initially anticipated. At the May 2023 meeting, Fed funds futures began to price a 5% terminal level.

Those remarks sparked a decline in gold prices. yellow metal’s investment appeal was diminished as the US dollar and Treasury yields increased. Despite a modest rise in Fed rate hike bets, the US Dollar DXY Index and mid- to long-term Treasury rates remain below their recent highs. Bullion prices should remain above recent lows in the range of 1,615 to 1,617 assuming that the US Dollar and rates across a large portion of the curve remain below their highs.

Still, there are downside risks, and gold prices are largely influenced by how the market believes the Fed will interpret and act on economic data because the outlook of the Fed is based on that data. The Central bank efforts to reduce inflation have been complicated by a robust US labor market. Data like job openings and initial jobless claims have not yet indicated a turn, despite the fact that interest rates take longer to have an effect on the job market. Job openings increased to 10.72 million in September, according to the Job Openings and Labor Turnover Survey (JOLTS), surpassing the +10 million estimate and surpassing the upwardly revised 10.28 million in August.

Gold’s next directional cue comes from the US non-farm payrolls report (NFP) on Friday. Analysts anticipate that the United States will add 200k jobs in October, according to a Bloomberg survey. That would be the weakest growth since December 2020, which would benefit gold by lowering USD and yields and cooling Fed rate hike expectations. A number that was higher than anticipated would be the downside risk.

According to the most recent Commitments of Traders report (COT) from the CFTC, gold speculators reduced their bullish bets on the metal. Non-commercial shorts increased by 9,990 for the week ending October 25, while longs remained virtually unchanged. Gold’s net long position decreased to 59,342, the lowest level since September and the weakest since April 2019.

XAU/USD Technical Prospects

In Asia-Pacific trade, gold is currently trading approximately 0.3% higher, bringing the weekly loss to roughly 0.25%. A probable Double Bottom reversal is in progress and might signal the end of a protracted downturn. Before a breakout is likely, prices must surpass resistance, which is the high point between the September and October bottoms at 1,729.46.

Price clearance of the declining trendline and the 50-day Simple Moving Average would be necessary first (SMA). The breakout goal is set at 1,840.75 based on the measured move (distance between troughs and peaks). The pattern would be invalidated if prices dropped beneath the troughs. A bullish outlook is supported by a positive divergence in the Relative Strength Index (RSI).

Technical Parameters – Daily

Gold Futures

Simple Moving Averages Daily