The gold price forecast for the week will be largely determined by the outcome of the Non-Farm Payrolls report, scheduled for release on Friday. The ADP Employment Change, a measure of private-sector employment, did not create any surprises. It came in at 455k, which met expectations and represented a decline from the previous figure. Also, on Wednesday, the final GDP figure came in at 6.9%, which was lower than the last, and consensus numbers of 7.0%.
The figures were bad for the US Dollar, and gold prices rose 0.83% as traders aimed to profit off the underwhelming support for the US Dollar on the fundamental side of things. The market projection is for employment change to drop from 678K to 485K and the unemployment rate to fall from 3.8% to 3.7%.
We need to see a match for the XAU/USD pair to be tradable on the NFP report. Higher-than-expected employment change must accompany a static or lower unemployment rate to produce a potential for a downward track in gold prices. In the same vein, a buying opportunity on the XAU/USD may present if there is a lower-than-expected employment change and a static or higher unemployment rate. A conflict presents a no-trade situation, and the gold price forecast will follow the pre-existing fundamentals at play in the market.
Recent price action is trading in a range formed by 1960.13, acting as the ceiling, and a dynamic floor that trades between 1900.95 and 1917.61. A downbeat NFP report could pressure the greenback, providing an impetus for a ceiling break at 1960.13. This opens the door for a leg up towards 1974.29, with 2013.77 forming an extra northbound target.
On the flip side, an upbeat NFP could provide for a further correction in gold prices, targeting a breakdown of 1917.61. This scenario brings in 1900.95 and 1881.68 as the initial downside targets. A deeper correction is required to make 1860.77 available as a new target to the south.
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This post was last modified on Mar 30, 2022, 18:58 BST 18:58