Nov 04, 2022
VOT Research Desk
How big of an influence has the US jobs data historically had on the price of gold? The XAUUSD pair’s response to the previous 27 NFP printing was examined in a study, the findings of which are presented in this article.
As the US Bureau of Labor Statistics (BLS) prepares to release the October jobs report on Friday, November 4, we provide our findings.
Following the 263,000 increase in September, there is anticipation of a 200,000 gain in nonfarm payrolls.
Gold Analysis Technique
We charted the gold price’s response to the NFP release 15 minutes, an hour, and four hours afterwards.
Then, we evaluated the response of the gold price to the difference between the actual and anticipated NFP release results. For data on deviation, we used the Economic Calendar, which gives each release of macroeconomic data a deviation point to indicate the degree of divergence between the actual print and the market consensus. For instance, the market forecast of 750,000 was significantly missed by the August 2021 NFP report, and the deviation was 1.49.
However, February’s (2021) NFP print of 536,000, which was higher than the market’s forecast of 182,000, was a welcome surprise, with the deviation recording 1.76 for the month. In order to determine the time period where gold had the strongest link with a surprise NFP, we lastly determined the correlation coefficient (r). When r moves toward 1, it indicates a significant positive correlation, while when r moves toward -1, it signals a significant negative correlation.
An optimistic NFP result should push gold, which is measured as XAU/USD, to move lower, indicating a negative association.
With the exception of information for March 2021, there were 12 negative and 15 positive NFP surprises in the preceding 27 announcements.
The variance was, on average, -0.86 for weak results and 0.66 for strong ones. If the NFP reading fell short of market expectations, gold increased by $3.97 on average 15 minutes following the publication. On the other hand, despite some pleasant surprises, gold fell by an average of $3.22.
However, the correlation coefficients we calculated for the various time periods described above aren’t even close to being significant. This data shows that investors’ initial reaction is likely to be slightly more significant to a disappointing report.
The highest negative association, with r value of -0.57, is observed 15 minutes following the releases. one hour following the
The association between gold and NFP surprises may be weakening due to a variety of variables.
Investors may attempt to book their profits toward the London fix a few hours following the release of the NFP on Friday, which might cause gold to reverse its direction after the initial reaction.
However, it’s important to keep in mind that the Fed declared in July that it had given up on rate guidance and would instead wait until after the publication of new data to determine its next course of action.
The Fed’s data-driven approach to policy may therefore prompt markets to respond in a more dramatic way than usual.
